Student Loans - Don't we all love them ;)
Okay I know this is a tough subject to remain positive about... Especially considering in America we owe $1.5 trillion in loans! If you want some more not overly positive facts check out this article where I found the previous fact.
If you are anything like me you know we can go on and grog about all the debt we have or we can do something about it!
My Student Loan Debt Situation
So to be completely honest my story is a very tame one. My student loan debt is very low compared to many of my friends and I would say a lot of people in America. The reason why is because my mom is awesome and worked at the university so I got free tuition! Seriously she is the best :)
As awesome as my mom is though we don't live well together. It's probably because we are both pretty alike... We are creative and maybe a little control freakish (though we would never admit that), then add on the traits I get from my dad - super resourceful but can never be wrong. Anyway living together puts a strain on our otherwise very good relationship. Thus the story of my student debt.
As I said before my mom's job covered tuition, but it did not cover housing. Housing included living in the dorms and because you live in the dorms they make you pay for a ridiculously priced food plan with mediocre food at best. It was always a joke that prisons that used the same food company had the tier above us.
Anyway when it was all said and done I came out of college with only $10,000 worth of student debt. So really I was very blessed. Quiet frankly it should have been more because I also studied abroad and that was not covered by the scholarship either. So I'm guessing my parents were rock stars and footed that bill while I was gone - and never took credit for it!
Mom/Dad you rock! I love you and thank you!
So now you know my student loans are not bad at all. I'm currently about 5 years into my repayment and have paid pretty much the minimum. I pay $110.00 a month. Earlier this year I did an extra payment of like $1,400 or something but other than that have only paid the $110.
My goal is to kill the loan by Dec 31st 2019 - (it is currently December 13th 2019).
Student Loans and What You Don't Realize
I'm not going to claim to be an expert on student loans but here are a few things I have picked up from various sources. Please verify your for yourselves as I have not completely fact checked everything.
1. Student loans accrue interest daily!
2. You may qualify for loan forgiveness but if you refinance/consolidate your loans you won't qualify anymore!
Check out this article for situations where your loans can be forgiven :
Before you go refinancing through loan companies like SoFI & Earnest be sure to make sure your not eligible for loan forgiveness.
Those are the main things I remember about student loans that I found really interesting and helpful to know! All of this information came from varying Podcast episodes from Bigger Pockets Money Show which is about how to obtain financial independence. They interview people who have actually achieved it or are on their way. It's a stellar podcast and Bigger Pockets in general is an amazing source of information and is our main source for research regarding Real Estate investing.
Calculating Daily Student Loan Interest
On one of the Podcasts a lady referenced how much she was spending a day on interest with her student loans. I thought it would be "fun" to see what mine is since it really isn't a ton of debt. Since i'm not the math whiz I used to be I did some googling on how to do it and found this article.
So here is my example:
Step 1 - Calculate Daily Interest Rate
Interest rate in decimal form/365(days in a year)
926: (0.03150 / 365) = 0.00008630136
927: (0.06550 / 365) = 0.00017945205
928: (0.03610 / 365) = 0.0000989041
Step 2 - Identify Daily Interest Charge
Daily interest rate x outstanding balance
926: 0.00008630136 x $2,553.48 = $0.22
927: 0.00017945205 x $310.33 = $0.06
928: 0.0000989041 x $3,290.47 = $0.33
Step 3 - Convert to a Daily Amount
Add the 3 loan totals
926: $0.22
927: $0.06
928: $0.33
Total: (0.22+0.06+0.33)=$0.61/day
*BONUS: Step 4 - Convert to a Monthly/Yearly Amount
Multiply the daily amount by 30(days in an average month)/That total by 12(months in a year)
$0.61 x 30 = $18.30/month
$18.30 x 12 = $219.60/year
Calculating my Fiance's Student Loan Interest
For fun my finance let me run his numbers too! His is a little more complicated then mine but is also larger so might be more impactful/relatable number wise.
Step 1 - Calculate Daily Interest Rate
Interest rate in decimal form/365(days in a year)
723: (0.034 / 365) = 0.00009315068
724: (0.068 / 365) = 0.00018630136
725: (0.034 / 365) = 0.00009315068
726: (0.068 / 365) = 0.00018630136
727: (0.0386 / 365) = 0.00010575342
728: (0.0386 / 365) = 0.00010575342
729: (0.0386 / 365) = 0.00010575342
730: (0.0386 / 365) = 0.00010575342
731: (0.0386 / 365) = 0.00010575342
732: (0.0466 / 365) = 0.00012767123
733: (0.0466 / 365) = 0.00012767123
734: (0.0429 / 365) = 0.00011753424
Step 2 - Identify Daily Interest Charge
Daily interest rate x outstanding balance
723: 0.00009315068 x $2,701.89 = $0.25
724: 0.00018630136 x $5,273.50 = $0.98
725: 0.00009315068 x $3,533.06 = $0.33
726: 0.00018630136 x $5,005.26 = $0.93
727: 0.00010575342 x $3,541.18 = $0.37
728: 0.00010575342 x $1,721.90 = $0.18
729: 0.00010575342 x $2,581.05 = $0.27
730: 0.00010575342 x $786.14 = $0.08
731: 0.00010575342 x $1,694.13 = $0.18
732: 0.00012767123 x $4,245.83 = $0.54
733: 0.00012767123 x $1,681.42 = $0.21
734: 0.00011753424 x $3,088.03 = $0.36
Step 3 - Convert to a Daily Amount
Add the 3 loan totals
723: $0.25
724: $0.98
725: $0.33
726: $0.93
727: $0.37
728: $0.18
729: $0.27
730: $0.08
731: $0.18
732: $0.54
733: $0.21
734: $0.36
Total: $4.68/day
*BONUS: Step 4 - Convert to a Monthly/Yearly Amount
Multiply the daily amount by 30(days in an average month)/That total by 12(months in a year)
$4.68 x 30 = $140.40/month
$140.40 x 12 = $1,684.80/year
Recap
Student loans are mind boggling. Yes we know they make you go through some mumbo jumbo course so you understand what you are signing up for. Let's be honest I have no idea what that course said. I just said I read through it and signed on the dotted line because if I didn't how was I going to pay for my education...?
Looking back now would I honestly do college again? Realistically probably not. My career doesn't require a degree and the job I worked after college didn't either - nor did it jump my pay because I had a fancy paper (which i'm not even sure where it's at...).
I'm not sure about how you feel about whether your education was worth it or not. That's not really the point of this post either. This is for people who in some manner ended up with student loan debt and helping them to determine what they are paying in interest daily/monthly/yearly.
Knowing these numbers will hopefully encourage people to get down to business paying off some of their debt. Please note each person's situation is different and you should compare student debt to credit card debt and mortgage debt. They all play a role in our financial lives, but it is nice to get a more close to home grasp on them rather than just seeing a huge number.
My student loan interest is less than a dollar a day, but still if I went out and spent $0.60 on a candy bar everyday I would notice it in my bank account. After recognizing that the longer I hold this debt "the more hypothetical candy bars i'm buying" helps me put the bigger picture into perspective. It is inspiring me to want to pay it quicker and quicker!
I hope this does the same for you and allows you to get a better idea on what your debt is costing you. Next steps take action on paying it off :)
Gratitude
I am extremely grateful for my parents supporting me in my education and life in general. They have always been my number one fans and though they aren't the most flashy about things I know they genuinely love me and believe in whatever it is I want to do. They don't care if I have a flashy degree and make millions or pennies. They believe in me and want me to be my best but also understand my best may not be there idea of what "best" is. Also my brother is a superstar too! He made me an authorized user on a credit card when I went to Spain - let's just say I owe him a couple grand for helping fund my study abroad and a few too many absinthe/tequila shots...
Though I don't think I would do college/university again I am still thankful I did it. I love learning and my professors made classes interesting and intriguing, though most of the things I learned aren't put to use in my daily life I still enjoyed expanding my knowledge. It gave me the opportunity to live/study in Spain and meet amazing people. My mom couldn't tell me I couldn't go because it was a requirement for one of my majors :D Also my sorority taught me more life skills than I ever could have imagined. I learned to fight the power, deal with MANY emotions (mine but mostly other peoples that I could barely comprehend), time block and perfected my ability to hold down liquor.
I'm super thankful for the resources that are widely available if you take the time to look. My favorite resource is Bigger Pockets and all of the information they have available. I listen to at least one of their podcasts daily and every time I get more new information that adds to my life. Thank goodness Eliezer (fiance) ran across their website! It is seriously a wealth of knowledge and the people that are apart of the company are absolutely amazing - I hope to meet them all one day!
Lastly I'm grateful for the opportunity to share this knowledge and hopefully help others. Student loan debt can be very stressful and sometimes doesn't feel like it's worth it. Sadly it's not going away (seriously if you file bankruptcy it doesn't go away) and all we can do is try our best, stay informed and make a conscious effort to get rid of it quickly!
🙏 Thank you for reading! Do you have a grasp on your debt? Why did or didn't you take out debt? What's your favorite memory of college/university? 🏫
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