Is it sad that I would do (almost) anything to have student loan debt of $33,000, the national average? I’ve been making payments on my loans for almost a year and it feels like a drop in the bucket that is the size of the Pacific Ocean. It’s easy to get into debt and so damn hard to get out of it. I keep thinking about things I could have done differently while I was in school, so, while I certainly made some wrong choices, perhaps I can give you advice so you avoid some of the mistakes I made.
Tip #1: Start saving for school now
I graduated from college knowing that I wanted to attend graduate school within 3-5 years, but I didn’t save a penny. Three years passed by and I finally felt ready to go back to school, but since I hadn’t saved anything, loans were my only option. I could have put away $100/month for 36 months and ended up with $3,600 for books or airfare or software. Instead, I took out a loan for these incidentals.
Tip #2: Apply for as many grants and scholarships as possible.
I did not do this. At the time I was applying to school, I felt like the chances of me qualifying for something were incredibly slim: I made a decent salary, I did not belong to an oppressed minority group, I did not live in XYZ underrepresented county, etc, etc. I filled out the FAFSA and that was about it, but good things ended up coming out of it. When I got my acceptance letter from Penn, I was surprised to learn that I was to receive an $8,000 annual grant based on merit. Over the course of my first year, I soon learned that many professional organizations also award grants to current graduate students. I learned my lesson this time and applied for an Urban Land Institute (ULI) scholarship for $5,000 – and I got it! I wish I had ignored the negative voice in my head and applied for more scholarships, because who knows what might have happened.
Tip #3: Don’t borrow more than you need
Loans can be used to cover tuition, fees, and living expenses. My parents were generous enough to offer me $1,500 per month while I was in school to cover my living expenses. Without their help, I would be looking at debt closer to $100,000. So thank you, Mom and Pops. I thought it would be a good idea, however, to borrow an additional $5,000 per year as a safety net for living expenses, in addition to the amount I borrowed for tuition and fees. That translates to an extra $10,000 borrowed. Looking back, I wish that I had forced myself to stick to a living budget of $1,500/month. But, I can look at it another way: let’s say I hadn’t borrowed the extra $10,000 and instead, relied on my credit card as a safety net. The interest rate on my credit card is way higher than my loans, so maybe I would have been worse off. Perhaps I should have just made a very detailed budget to see how stretched I would have been with the $1,500/month, and then borrowed accordingly.
Tip #4: Live like a graduate student
I’m not going to say don’t go out to eat or get drinks with your classmates, because you are really going to miss out on bonding opportunities and regret it. So go out (within reason), have fun, and make friends. That said, think about other ways you can keep expenses down: clothing, apartment furnishings, printing, etc. Only buy the required textbooks, and used at that. Do not pay for optional materials like I did! Affordable housing is critical. Luckily, Philadelphia was cheap compared to San Francisco or New York, but I could have been smarter about my choices. My first year, I paid $475/month to split a 2 bedroom apartment with a classmate in an okay, sometimes shady neighborhood in West Philadelphia. My rent was cheap but my apartment got broken into while I was there…so I moved to Center City, which is a lot safer and a whole lot more exciting. I chose to rent a studio apartment for $900/month, which was almost double my previous rent, when I probably should have looked for a roommate situation on Craiglist. Ah, hindsight.