Saving for College, or Not! What I Wish I Knew Then

By Kyle Osborne, Financial Literacy Coordinator, TS Institute

After graduating high school from a town of 28,000 people in central Iowa with dreams, hopes, and aspirations, my plan was to attend a private school to study my passions Christian Education and Business Administration. I quickly found myself attending a college I could not afford and doing it with the unwritten Midwest mentality: “do whatever it takes to get the job done.”

Fast-forward four years and I’m a college graduate and $85,000 in student loan debt without a job, and my private loans are coming due 30 days after graduation. I had no idea when I was in school that I’d be preparing to pay approximately $850 a month to pay off the debt I had accrued. When I married the girl of my dreams a few years later, the weight of student loans compounded. Although my loan payments had decreased my debt slightly, she brought $25,000 of her own student loan debt into the financial picture. Our combined debt not only meant estimated monthly payments of over $1,000, but could have also spelled financial disaster for a newly married couple. We are fortunate to have been able to navigate the challenges that student loan debt presented us and are proudly on our way to financial freedom.

What I wish I had known before I started college.

My wife and I now have a total of $32,000 remaining in our student loan debt and are proud of that accomplishment considering we have done so on an income averaging $35,000 a year for the last 7 years. If someone had asked me what paying back my student loans would look like after graduation, my ignorance would have been truly astounding. And if asked how much I would be paying monthly I would have truly underestimated the amount.

Here are a few things I wish I had known before college:

  1. Study your passion. All the money in the world will never pay you enough to do something you hate and will find no satisfaction in, so even in spite of the debt I accrued, it was integral that I went to college for what I was passionate about.
  2. Project your income.  A good rule of thumb for borrowing for college is to not borrow more and your projected income for one year. (Ex: If my job is going to pay $40,000 a year when I graduate I should not borrow more than $40,000 total)
  3. Know your estimated repayment plan ahead of time. A good rule of thumb for calculating a student loan monthly payment is to take the cumulative debt and multiply that by 1%. Talk to your student loan provider for more accurate estimates, including any accumulated interest.
  4. Landing your dream job may take time. I had no idea it was going to be hard to find a job I loved right out of college, never mind one that would pay me enough to service my debt. So I had to settle for less than the dream for a while to make my students loan payments until I could find a job that I loved.
  5. Student loan debt is a long-term commitment. I had no idea going in that I was going to be in debt for the next 20 years or that it might cause me to live paycheck to paycheck like 76% of Americans.
  6. Student loan debt affects relationships and future planning. Money is a notorious cause for strife in marriages, new and old. Transparency about the debt that I had and the ability to work as a team to build a plan for reducing debt was vital to surviving the challenges that debt can bring into a marriage.

Take a few lessons from folks like me so you don’t have to fumble through this process.