The Horrors of Student Loans

The horrors of student loans

You have just graduated from college and the world is waiting for you! You are so excited about your future, and you are ready to put your newly acquired skills to use in the job of your dreams. You are not picky about your upcoming profession, and you don’t mind starting at the bottom. You know you are going to do great things!

However, weeks go by, and you have yet to land an interview in your chosen field. You have already received mail regarding your student loan: now that you have graduated, your loan payments are beginning to be due. Since you don’t have a job and your first payment is due before you will begin receiving a paycheck, you call your loan servicer. The kind person on the other end of the line tells you not to worry – they can put your loan into forbearance until you get a job.

When you graduated, you weren’t thinking about your student loan, since you figured you would easily land a job and be able to start paying. Now your student loan is beginning to be a worry that is always in the back of your mind.

Six months after graduating, you finally accept a part-time minimum wage job, since you can’t find anything in your field. You know you need to start paying on your student loan, so you call your loan servicer, and they suggest and income-based repayment plan. Since accounting and math were not your strong subjects, you accept that the loan servicer is working with your best interest in mind – and they are! They are working to milk the best interest out of you – the most interest they can possibly get out of you. If you had known that you could be paying on your student loan for 25+ years after graduating and end up paying $20,000-$40,000 more than you borrowed in interest, would you have made different choices about college?

Here are some of the most common ways that student loan servicers take advantage of naïve college students:

1. Forbearance. You don’t need to make any payments as long as your loan is in forbearance – but interest still accrues. This means that every month that you do not make a payment, you owe more than you did the month before.

2. Income-based repayment plan. If you have a low-paying job, your payments can be lower than your interest – which means that your total amount owed will continue to grow. Or you might pay only a small amount on your principle, which means your payments will stretch out as long as possible, in order for the loan servicer to receive as much interest as they can from you, for many years to come.

This can also be a problem if you get a raise or higher paying job: you have become comfortable paying a specific amount every month on your student loan, so you don’t want to add your additional income to your payments. Really, what’s the advantage of getting a raise if you just have to put it all on your loan payments?

3. Interest-only payments. Your principle will never go down as long as you pay only the interest. Ten or twenty years after you graduate, you will still owe as much as you owed the day you graduated.

4. Interest on most student loans is compounded daily. What does this mean? It means that every day that you do not make a payment, your interest grows. When you sign up with the loan servicer for them to automatically take out your payment from your bank account, they will wait until the last day in your payment cycle, in order to get the most interest, and they will do it at the end of the day. This way, your payment is received on time, but they process it the next day (accruing another day of interest) and if the payment date falls on a Friday, they service it on Monday, so they get the interest from Saturday and Sunday, too.

If you are stuck with a student loan, make the payment yourself (instead of having them take it out automatically), as early as you can in the month. You will save days of interest every month. Also, pay more than the minimum amount! This is the only way you will be able to pay it off before you are in your mid-40s. Loan servicers are happy to have you make the lowest possible payments because this will give them the most possible interest.

If you are not yet in college, what can you do to avoid the horrors of student loans?

1. Parents, begin a college savings account for your child as soon as possible after birth. Most states have several options for college savings. This can also help you prevent the need to take out a parent loan, which can have many of the same horrible consequences as student loans – and with a higher interest rate to go with it.

2. Students, start saving for college when you are in grade school. Having a college savings account will not affect your eligibility for student financial aid such as grants and scholarships, which do not need to be paid back. Work summers and save your earnings.

3. Educate yourself about financial literacy, especially savings vs. credit and debt. Don’t use the convenient excuse, “I’m not good at math,” because this is not math. It is plain and simple arithmetic. You have a calculator in your phone, and you can easily look up a loan calculator online, but in the numbers, and see how much you will pay for a loan over time, and how long you will be paying. Learn about what this means, and it will save you hours of worry in the future when you make the right decisions about your money.

4. Take AP or other college-credit classes while in high school. This will reduce the number of credits you have to pay for in college, reducing your cost of college.

5. Look at the cost of college. Consider starting your first two years at community college, which is generally much less expensive than universities and state and private colleges.

6. Search for private grants and scholarships through churches, community groups, fraternal organizations, and businesses.

I have heard too many stories of student loan horrors, and I do not want another person to suffer these horrors by getting trapped unknowingly by these tricky methods used by student loan servicers.

Horror stories from several students who got trapped:

“I graduated 12-1/2 years ago, and it took several years for me to get a job where I could afford to make any payments on my student loans. My loans were in forbearance all that time, and I didn’t realize how much interest was being added. When I finally did get a job, they put me on an income-based repayment plan, which, at first, put 90% of the payment on interest and 10% on the principle. I just ran a loan calculator and realized, at this rate, I will finally pay off my loan when I am 47 years old, 25 years after I graduated.” – Student A

“I graduated in 2007 and had a hard time finding a job, but when I did, I was assured that my student loans would be paid off, since it is a public service job. In 2017, I applied for loan forgiveness and discovered two shocking things: One, my student loan balance was the same as it was when I graduated (so I was paying only the interest); and, two, due to a clerical error in 2007, my loan was not eligible for forgiveness. Today I still owe almost as much as I did the day I graduated from college.” – Student B

“After I graduated eleven years ago, I was not able to find a job in my field for five years. In the meantime, I worked in sales, making minimum wage, so my loan was in forbearance all that time. By the time I got a job in my field and was making a decent wage, my student loan balance had nearly doubled. Today I still owe more than I did the day I graduated, even though my payments are $550 per month.” – Student C

Is this the best we can do for our next generation?

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Steppingstones to Financial Success Book C: Credit = Debt

After Middle School students learn to make a budget (see Steppingstones to Financial Success Book B: Budgeting Basics for Beginners), the next step is to learn about credit and debt.

How do you feel when a friend owes you money? Do you avoid a friend or family member when you owe them money? Borrowing money is never fun – and it must be paid back, with interest. As soon as you borrow money (credit), you have a debt hanging over your head that is waiting for you to pay it back.

This book, now available on Amazon, explains what interest is and includes practical examples of how much credit can cost, along with suggestions on how to avoid borrowing money. (Can you say, “savings account”?)

Steppingstones to Financial Success Book C: Credit = Debt
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Steppingstones to Financial Success Book B

Budgeting Basics for Beginners is now available! The first book, Book A: Awareness, introduced students in Middle School to becoming aware of their money, how much they receive and how much they spend. Book B is all about learning how to make a budget.

This book comes with a warning: if you do make a budget and plan to save some of your money, your friends may not be happy for you. They have their own ideas of how you should spend money you earn and receive as gifts – on them.

The other warning is that if you do not learn how to budget your money, you will find yourself running out of money, over and over, for the rest of your life. Learn to make a budget now, before you get into the cycle of borrowing and debt – which will be explained in more detail in the next book: C=D: Credit=Debt.

Book cover: Steppingstones to Financial Success Book B: Budgeting Basics for Beginners by Dana L Pride, illustrated by Jahla
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What color is this?

I don’t think Nathan understands the concept of colors. He knows what things are, but he doesn’t get it when we ask him what color something is. He knows the names of colors, though. If I ask him to give me the red pencil, he will just keep giving me pencils until he gets it right.

When he was younger and I would ask him the color of something, he always answered, “Gwee-yellow,” for green-yellow. What color is the dog? “Gwee-yellow.” What color is your coat? “Gwee-yellow.” What color is this paper? “Gwee-yellow.”

This past Saturday, we were preparing to color Easter eggs. I went into Nathan’s room to get some crayons so we could decorate the eggs before we dipped them in the dye. I could only find 3 crayons in his room, and guess what color they were? Green yellow.

3 green yellow crayons on colorful tablecloth

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This is Glorious

As I mentioned in my book, “I Want Ice Cream, Please,” Nathan is in a YouTube video! A couple of years ago, he was invited to be in a community production about inclusion with a number of other kids, so dancers and some in kids with disabilities. He was reluctant to participate without Daddy – so they are both in it! The final music video came out beautifully.

Actually, he is in a few videos I have uploaded, one which was recently removed by YouTube for not adhering to their guidelines. I called it “Bedtime Tantrum.” Nathan was 11 years old, watching himself in the mirror when I told him it was time for bed. He clearly dramatized his refusal while watching his reaction in the mirror, crying, “Noooooo, noooo.” The whole scene lasted a couple of minutes, and had received many comments from other parents of children on the spectrum. I am not sure why it was removed???

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I can’t underestimate Nathan

A few years ago, we took a vacation to the Oregon coast, one of my favorite places. I was so thankful to finally arrive on a beautiful summer evening. My husband, Nathan and I were walking on the sand towards the ocean.

I asked, “Nathan, do you know where we are?”

He nodded once and answered enthusiastically, “Yeah! Right HEEEERE!”

Nathan running on the sandy beach, near the ocean

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So much below the surface

Nathan is an artist, creator of thousands of pictures, on paper, on computer and on his iPad. I was able to extract hundreds of his creations and save them. Many, like this one, may not look like much, but this little video shows all the states it went through to get there, thanks to the timeline feature in Adobe Sketch. He put an entire village into each of his pictures, but we can’t always see it, since he creates, erases, creates, erases and creates again. Kinda like what’s going on inside him.

Meet Nathan in my book about him, “I Want Ice Cream, Please.”

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I’m Melting!

Today while I was at work, I was on the phone with my husband and he mentioned that where he and Nathan are, nothing is melting. Nathan, (always listening) in the background, said in a high and whiny voice, “Melting!”

After we hung up, it occurred to me why he said that, and in that way: it’s from the ‘Wizard of Oz.’ When did we last watch that movie? More than 10 years ago, before we moved to where we live now. Nathan has a great memory.

Get to know Nathan and what I am learning from him in my new book, “I Want Ice Cream, Please.”

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Parenting is a Learning Process

Nathan smiling and wearing a suit and tie, standing with arms crossed

I don’t know anyone who is prepared to be a parent when the time comes. No matter how much you read or plan, situations sneak up on you. Of course, you do your best at the time. Afterwords, you wonder, why didn’t I know about this? Could I have done better? Why didn’t I see this coming?

After Nathan didn’t grasp the concepts he was learning in kindergarten, due to his developmental delay and being in the autistic spectrum, I asked if he could repeat it. I felt like if he went over letters, numbers and colors for another school year, he could get it; it would sink in. At that time, the school principal who was in his IEP meeting said they were not allowed to hold students back because of the new “No Child Left Behind” regulation. I accepted that, then years later I discovered that was not the intent. If I, his parent, had insisted, Nathan could have repeated kindergarten. I didn’t know! I just accepted what they told me, and that was not the best for our son.

Parents of children with special needs, you know your child best. You know what he/she needs. Ask for it. Demand the best. Put your foot down to get what your child needs. That is a lesson I wish I had already known, before it was too late. Learn from my mistake.

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About Nathan

Drawings by Nathan of 5 cute little creatures

In my book, “I Want Ice Cream, Please: Lessons Learned from Our Autistic Son,” I introduced Nathan and I shared some of his drawings. I find his drawings everywhere: in notebooks, on scratch paper, on white paper and on lined paper, in his iPad. I just found this drawing yesterday in one of my notebooks I haven’t used in awhile. When I asked who is in this picture, he pointed out Daddy, Mama, Gabby (our dog), his Grandpa Joe and himself.

I sometimes have a hard time getting him to look directly at a book or picture. He sees it in his peripheral vision and won’t look right at it, but he sees it and will tell me what it is. If I keep telling him to look, he will turn his face toward it in an exaggerated way just to please me, but he doesn’t seem to know why he needs to look directly at it. I don’t know if this is typical behavior for persons on the spectrum?

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