The Quarter Life Crisis Chronicles Volume 5: A Neccesary Evil? #StudentLoans
The Quarter Life Crisis Chronicles Volume 5: A Necessary Evil? #StudentLoans
Student loan debt reached it highest in 2019. According to Forbes.com, “There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone.” This statistic has thrown the topic of student loan forgiveness, financial literacy, and the cost of college into the forefront of political talks… which is how we got here. I made the “mistake” of putting a political hot take on my Facebook and it garnered lots of attention and opinions. Here is said post:
So, if you’re wondering what this post entails, let me go ahead and lay it out for you. This post is not to justify a 1.5 trillion dollar debt. It is not to blame those with loans for their debt. Instead, I wanted to talk about the financial fork in the roads that we had to navigate from high school through college and into adulthood. I interviewed two people, one former student who came out with no debt and one student who took out less than the average Kennesaw State University student. So, lets introduce our interviewees!!!
Makayla
Age: 22
Year of Graduation: 2018
Major: Electrical Engineering with a Nuclear Engineering minor
Current Profession: Distribution Engineer
Briana
Age: 25
Year of Graduation: May 2017
Major: Architecture
Current Profession: Design Professional
Yes, I am interviewing myself. I am someone who despite their best efforts to minimize their financial burden, still came out of college with loans. I am also someone, who despite having the foreknowledge of the consequences of my actions, still made questionable decisions when I reached a few of those financial forks in the road and I think it is important to talk about my failures in the hopes that it will open the conversation further. With that, let’s get this party started!
Before we begin, let’s talk about financial literacy. According to Dave Ramsey, “Financial literacy is the possession of skills that allows people to make smart decisions with their money.” Why is this important? Well, here is another fun statistic, “..if you used the number of people who don’t live paycheck to paycheck as an estimate of financial literacy, only about 20% of people would qualify!” That is for ADULTS. Full time 9 to 5 ADULTS. The argument has been made that financial literacy needs to begin being taught in high school. And that is where we will start.
HIGH SCHOOL:
Me: On a scale of 1 to 10, how financially literate were you as a senior in high school?
Makayla: Maybe a 3. I had a high school job as a courier that paid pretty well for a 17 year old, so I did have some kind of income. I remember being very hesitant to spend money at all, so I had a pretty large savings going in to my freshman year of college (that didn't last very long). Outside of trying to save as much as I could, I didn't know anything about borrowing money, credit, or anything that matters in adult financial matters.
Me: Whew, in high school, I was honestly about a 3 as well. I knew about earning money. I worked from about my sophomore year through senior year on and off. Most of this money went to buying clothes or paying for school outings. I will say, I was very keen about keeping up my GPA and staying involved in school in the hopes of earning scholarships.
Me: Did your high school counselors assist you in choosing a college? Did they go over financial aid options with you?
Makayla: I went to a very small, rural south Georgia county high school. That being said, we had one counselor for the entire school. That person was not very involved at all in my choices or providing any information. Thankfully, I was involved in the engineering and technology club, and the club advisor was very helpful in helping me explore both schools and scholarship options.
Me: No shade to CHHS, but I do not even remember my counselor being involved in my college admissions journey past helping forward SAT/ACT scores and transcripts. This may be because my parents were very involved, but yeah…. (insert shrugging emoji).
So, two girls, one from a very small school in rural south Georgia, one from a suburban high school in Metro Atlanta with two very similar experiences with their school counselors… Let’s call this fork #1
Me: What did you know about FAFSA and Financial Aid?
Makayla: FAFSA was a whole beast on its own when it came to getting ready for school. I really didn't understand what was going on, but my high school hosted a presentation with a Georgia Student Finance Commission representative that covered the most basic requirements for the FAFSA. My mom and I managed to fumble our way through the actual form, but I didn't know what to expect as the outcome outside of the Zell Miller scholarship.
Me: I can 100% honestly say that I never touched FAFSA in the 5 years that I had to deal with it. My mom took on that burden as I found alternative means to finding money.
Me: Did you apply for scholarships and grants?
Makayla: I was actually pretty lucky in this aspect. My community offered a lot of support to high achieving high school seniors by allowing them to participate in a large local scholarship interview process one day during our last semester of school. Honestly, it was a little intimidating because it was one big interview where one student sat down and answered questions from all of the scholarship sponsors at onces. I did receive about $2,500 in scholarships out of this process. I was even more fortunate to be able to apply for a scholarship through the company my stepdad works for. They gave several dependants of their employees $10,000 scholarships distributed over eight semesters. This gave me a huge boost in getting started with my college career.
Me: Like I mentioned earlier, I was about that GPA and organization life. I knew that combination along with community service would be my best bet for scholarships. I received $8000 from SCAD which we all know is a drop in the bucket for that school. In total going into my freshman year I had over $2000 in scholarships from SPSU, NAWIC,Delta Sigma Theta, and the Masons.
Speaking of Scholarships, let’s talk about a HOPE and ZELL.
Me: Were you eligible for HOPE or ZELL?
Makayla: I did receive the Zell Miller scholarship.
Me: I also received Zell Miller. For those who don’t know Zell Miller was created as an “advanced” form of the HOPE scholarship. Zell pays for 100% of high school seniors graduating with a 3.7 GPA and a 1200 reading and math score on the SAT or a ACT composite score of 26.
HOPE and Zell Miller are forms of State Aid programs. If you do not know what a State Aid program is then let me explain. State aid is usually a grant or scholarship given to residents of a state who are attending an in state school. Most states offer some form of state aid. If you want to learn more about state aid programs in your state, you can find them here: http://www.collegescholarships.org/grants/state.htm
So, according to the upset Facebook commenters, this was about the time their first mistake was made. One of which was choosing the wrong college. Let’s talk about it.
Me: How involved were your parents in the college admissions process?
Makayla: I'm a first generation college student, so I don't think my family really anticipated how much college actually costs. My parents did go with me on the college tours and provided advice, but I was very independent in deciding which schools to apply to, deciding where I wanted to attend, and figuring out how to fund it.
Me: I like to tell people if I had gotten to choose my college, then I would have attended SCAD. Of course, we know this didn’t happen. My mom was ADAMANT about me attending Southern Poly, and I am glad she was because momma knows best. And my dad was very excited about the hopes of me eventually dropping architecture to become a computer scientist which was offered at SPSU.
Me: How did financials play into how you chose a college?
Makayla: It was the biggest deciding factor for me. I applied to and got in to serval schools, but after looking at the available financial aid at each, I decided on SPSU because I would be able to attend for the absolute lowest price for a quality education.
Me: Paying for school was EVERYTHING. Despite my best efforts to convince my mom (and myself) that SCAD was doable, knowing that I was already eligible for ZELL made it pretty easy to choose SPSU.
Now, if the argument for considering cost in the choice of a college is not strong enough for you yet, here is an article from the US News on 3 Reasons to Choose a College Based on Price.
If you are wondering how financial literacy in high school literally pays off later, I leave you with this infographic by Dave Ramsey:
So, as you can see, there are plenty of places where money management successes can happen. There are just as many places where mistakes can and probably were made in High School. Best believe this continues into college. But before we continue, some advice.
Me: What advice do you have for high school students looking to minimize the amount of loan debt that they take out?
Makayla: I was a tour guide for 3 years in school, so I've given this advice hundreds of times. Always check if the companies or organizations your parents are part of have scholarships. People like to help out their own, and lots of companies will provide scholarships. High schoolers should also look for scholarships locally during their junior and senior years because there's much less competition on the high school level for available funds when you compare to scholarships given during your college career. There's also lots of random scholarships online for all sorts of things (being left handed, being red-headed, pursuing certain career paths). Set a goal, like maybe apply for three scholarships a week, and make it happen. Decide on the schools you want to apply to during your junior year and fill out the applications as early as possible. Most applications open in early August, and some offer an early acceptance deadline. By being accepted early, you can apply for scholarships offered by the school.
Me: Apply for every scholarship that you can!!! If you are in a state that has state aid programs, then look and see how you can be eligible to reap these benefits. Save as much money as you can in preparation for the semester because it will be more expensive than you think. Also, if you can, start at a smaller school and save up some cash and then transfer. Lastly, if you are having a graduation party where you will inevitably be receiving gifts, don’t waste it. Save all of your gift cards and cash for the upcoming semester.
COLLEGE:
In a 2016 survey by LendEdu,
59% of college students would grade themselves a C or worse at managing money
Only 42% of students reported saving money each month
43% of students couldn’t name one major difference between a credit card and a debit card.
By this time, I was in the later years of my college experience and Makayla would’ve been in her second year. So how did we do in college?
Me: On a scale of 1 to 10, how financially literate were you in college?
Makayla: I'd say I moved up to about a 5 throughout my college career. I managed to never be too broke in college. I depleted my high school savings (and the money supplement my parents would occasionally send my way) by the end of my freshman year. I got an on-campus job at that point, but it was mostly just to get by and do the things I wanted to do. I didn't feel like I had enough money to care about my long term financial health at that point.
Me: I would say about a 6.5 overall. My first few years I was balling on a budget as a broke college student. So monthly outings on the weekends and ramen on the weekdays. I was not like go without ever, by any means. But I was the person that maxed out their credit card in six months. I also was blessed with the ability to take a financial literacy course, so by the time I graduated, I had a budget and a plan for paying down my credit card. By graduation, I was closer to an 8. I did make the mistake of having a surplus of cash at one point and instead of saving it to pay for my last semester, I lived my best life…
Me: How involved were your parents in your finances during college?
Makayla: I actually hated asking my parents for money when I was in school. That being said, they did give me the support I needed when there were gaps in what wasn't covered by financial aid, and they also deposited money for me every now and then. I did my best to work for most of my money in school and avoid asking for their help as much as possible.
Me: My parents made sure I did not go without. My dad checked in and slipped some cash my way. My mom was all up in my FAFSA business and Financial Aid. She also knew the importance of building credit and that is why I got my credit card.
Me: While you were in school, what did you do to minimize cost?
Makayla: The biggest cost saving measure I took was being a RA. As you know, we were compensated with our housing cost completely covered and a small meal plan. If I didn't have this position, I would have absolutely had to take out loans to cover the cost of housing during college.
Me: Yes, RAing saved my financial life, I RAed for four years, one and a half of which I was a SRA. Like Makayla said, RAing payed for housing and a small meal plan stipend. While I was an SRA, my housing and full meal plan were paid for as well as a stipend of $200 was given to me. Other than that, I went to every event that had free food or swag.I also took an on campus job for my last year of school. Which led to unconventional ways of saving money.
There are plenty of ways to minimize cost during college, in fact, I wrote a blog about it. Yes, this is a shameless plug.
https://thebloomingbabe.com/financial/5-college-hacks-to-save-you-money
Me: What did you know about FAFSA and Financial Aid at this point?
Makayla: I worked in the Financial Aid office on our campus for a couple of years, so it was literally my job to know how all of these things work. I could field easy questions about forms, requirements, and deadlines, but beyond the basics, there were so many technicalities, rules, and hoops to jump through. Only someone who handled financial aid on a full time basis could really understand how it all actually worked. For me personally, I knew I had to fill out the FAFSA every year to receive my ZELL, and I had to send copies of my grades to those who were giving me scholarships. I also didn't stop looking for new scholarships to apply to once I was actually in college. That's how I continued to fund my education after the first smaller scholarships ran out.
Me: Like I said, I can 100% honestly say that I never touched FAFSA in the 5 years that I had to deal with it. My mom took on that burden as I found alternative means to finding money.
Me: Did your financial aid counselors assist you in choosing financial aid options with you?
Makayla: Knowing them personally and having access to them every time I was at work, I definitely think they were quick to recommend different options and ways to maximize the aid I was recieving. I also got to see how other people interacted with the counselors. The students seemed pretty quick to get frustrated with them, even though I knew they actually wanted to help. The process of getting aid can be so tedious and difficult that even the counselors had their hands tied at times.
Me: I honestly feel a bit let down by my financial aid counselors because it was not until my last year of school that I found out that you did not have to take out the full amount of the loan. So I was taking out the full amount of a loan when I maybe needed half of the cost of the loan.
The Petersons.com wrote a great article on working with the Financial Aid office called College Financial Aid: Dealing with a Financial Aid Counselor .
Speaking of Scholarships, let’s talk about HOPE and ZELL again.
Me: How did you maintain your HOPE and ZELL eligibility?
Makayla: I was an all A student in high school, so I knew I wasn't going to let my grades slip in college. I got my first ever B in my very first semester, and it honestly freaked my overachieving self out a little. I'm very internally motivated, so that drove me to make a strong effort for an A in every class (even though it DEFINITELY didn't always happen). With my personal drive, it was easy for me to keep up with the scholarship requirements. I also tried to front load as many easy core classes as I could in my freshman and sophomore years so that I could focus on the more difficult high level courses with less on my plate in my last two years. However, it only covers attempts at 127 hours. My program was 129, and I tacked on a minor. The aid did run out in my last year of school.
Me: I kept Zell for the allotted amount of time you are given ,the 127 hours. However, my degree is a five year degree that totaled 154 hours so despite my efforts to be tuition free, I had to pay for my last semester. If you are doing the math, then it would have been my last year, but I came in with AP credit. If you are wondering why I didn’t use scholarship money to pay for the last semester, its because despite my best efforts applying to and interview for multiple scholarships, I did not receive any.
Zell and Hope both have eligibility requirements that include hours enrolled and a GPA to maintain. If you would like to know more about the specifics, you can find it on GA Futures website.
So, This is where things get a little interesting because you, Makayla, will not be able to answer these, unlesss…. you can answer these about your younger brother.
Me: If you did take out loans, do you remember entrance counseling?
Makayla: Fortunately, I never had to take out any loans.
Me: Yes, I cried taking my entrance counseling. Like bawled.
Me: Did you feel the burden of student loans affect you during your time in school?
Makayla: I can't speak to this personally, but I can say it seemed like the people around me saw it as an inevitable unfortunate result of getting a degree. For most people, it seems like just a normal part of going to college.
Me: I did not really feel a lot of pressure. I was careful to maintain a “goal” for my loans. Rather than a “goal” let me say a cap. I capped my loans at a certain amount and was adamant about not going over that number. I did not go over my cap.
Before we continue, I don’t want to finish this section without giving more solid advice.
Me: What advice do you have for college students looking to minimize the amount of loan debt that they take out?
Makayla: Don't stop looking for scholarships once you start school because there are actually several out there specifically geared towards upperclassmen that people just don't apply for. I received a scholarship for women in electronics once, and they actually gave one of the awards to a guy because not enough women applied. (I don't know if that speaks more to people not applying to scholarships or the lack of women in my field.) I'd also encourage students to get an on campus job if working part time while in school is something obtainable in their situation. I feel like it really helped me keep a finger on the pulse of what was going on on campus, got me recognized by professors outside of the classroom, and even got me recommended for a couple of different scholarships.
Me: Apply to every scholarship you can. When you talk to your financial aid counselor, go in with a list of questions. The best decisions are educated decisions. Find ways to mitigate cost like RAing or finding an on campus job. Don’t feel bad to ask your parents for help. Lastly, and this one is advice that continues on after graduating, trade temporary discomfort for permanent gains in the future. Was RAing always fun? NO. Was leaving parties early to go study so I could maintain Zell fun? NO. Is having more money in my account every month because I have a smaller loan payment fun? YES.
YAYYYY!!! You’ve graduated! Now what? Well, of course, it’s time to start paying bills. The bill with the most hubub around it? Student Loans. Makayla will be coming from the perspective of someone without loans. As we know, someone without loans will have an easier life, but how easy? Let’s find out.
Me: On a scale of 1 to 10, how financially literate were you upon graduating from college?
Makayla: Maybe a 7. I can definitely manage my household expenses and have learned how to save. I've even gotten into inventing on a small scale. I'm still trying to figure out the whole saving for retirement thing and all of the plans and regulations that go along with that.
Me: How has not having loans impacted your life?
Makayla: I feel like I'm not starting my real "adult" life at a deficit. I'm more comfortable taking on things like living by myself (as opposed to having roommates) because I do get to keep more of the money I'm bringing home.
Me: How do people respond when they find out you are one of the few with NO LOANS?
Makayla: They usually tell me I'm lucky and usually like to follow it up with the amount of debt that they have. While I do feel like I'm very fortunate, I don't think I can attribute all of it to luck. When I started school, one of my biggest goals I set for myself was to graduate debt free, so I feel like I've also worked very hard to put myself in the position I wanted to be in.
Me: What do you do with allll of that extra cash?
Makayla: Right now, I'm mostly just paying bills. Having lived on campus, paying real rent and bills was a little overwhelming at first. Now that I've figured out how all of that works, I'm mostly just trying to save as much as I can. You never know if/when something will happen, and you'll be unable to work or have unexpected large expenses. I want to put myself in a position that I don't have to worry about anything with money. On the much closer horizon, I'd really like to by a car before the end of this year. My car now does its job and gets me where I need to be, but I'd really like to enjoy something newer. No matter how much money I ever make, I like to keep myself humble and living well within my means. I had a comfortable upbringing, but I do come from a family that loves a good deal and finding ways to save money. I think that's ingrained in who I am now, so I don't go crazy with spending.
Now, it’s time to end the humblebrag to get back down to business. Although I will say, someone free from loans does come from a place of privilege. HOWEVER, it doesn't mean that that privilege was not earned. A lot of people without loans worked very hard to achieve this. I am not one of these people and I will be talking about the burden of Student Loans. I graduated with less than 20k in loans. With that, I will be going on another tiny rant because some of you need to hear this loud and clear.
YOU DO NOT HAVE TO HAVE 60K+ IN LOANS TO FEEL THE BURDEN OF STUDENT LOANS. ANY AMOUNT OF DEBT IS A BURDEN. DO NOT, I REPEAT DO NOT EVER NEGATE ANYONE’S EXPERIENCE BECAUSE YOURS IS WORSE. THAT IS A DICK MOVE.
Thank You, now let’s continue
Me: On a scale of 1 to 10, how financially literate were you upon graduating from college?
Me: Upon graduating I would say a solid 8.5. I had a plan for eliminating my credit card debt.. My budget was strong, and my savings was even stronger.
Me: How did you spend that 6 month grace period before your loans came out?
Me: I used this time, and that little bit of extra cash to pay down my credit cards and to begin my savings.
Me: How was your exit counseling?
Me: Because I was tracking my loans, I had a decent idea of what my monthly payment would be. I lived on a budget based on my loan payments before my loans even came out.
Me: Do you have a plan for paying off your loans?
Me: I honestly have a loose plan. Because my loan payment is relatively low. My goal is to have it paid off by 2021.
Me: How easy or hard have life been with the addition of student loans?
Me: Like I said, I had a plan before my loans even came out and a budget to match. It is on autopay so my only worry is making sure my paychecks correspond with the automatic payments.
Now I know yall wanted something juicier that. So…. here are some statistics!!!
According to a February article from Forbes.com:
Total Student Loan Debt: $1.56 trillion
Total U.S. Borrowers With Student Loan Debt: 44.7 million
Student Loan Delinquency Or Default Rate: 11.4% (90+ days delinquent)
Direct Loans - Cumulative in Default (360+ days delinquent): $101.4 billion (5.1 million borrowers)
Direct Loan In Forbearance: $111.1 billion (2.6 million borrowers)
(Source: As of 4Q 2018, Federal Reserve & New York Federal Reserve)
Before we finish, let’s get one more hot take in.
Me: What is your take on the Student Loan crisis?
Makayla: There is literally no reason school should cost as much as it does. It also should not be as difficult to receive aid outside of loans. It is unfair that these very young people coming out of high school are pushed to go to college because 1) it's crazy to think that you know what you want to do forever at age 18, and 2) we aren't doing them any favors and asking them to take on this debt at a point that they don't really understand the lasting impact. It feels unfair that even though college is highly encouraged, it puts a lot of young people in a deficit to start their careers.
Me: Okay, I have a list of reasons I think we reached a crisis with student loans.
Everyone was told they needed to go to college to succeed . This forced a lot of people to go to college who may not have been college material and then they drop out two years in with $25k in debt.
A lot of people went to schools they could not afford. Prestigious schools come with a prestigious price point., and the clout was more important than financial security in the future.
A lot of people did not care about their return on investment. If you are taking out 25k a year for a career that inevitably maxes out it earning potential at 60k, then it’s time to either reevaluate the career choice or the loan amount.
Financial literacy is not taught as well as it should be.
The people who should be helping us are actually failing us. This starts in high school with our counselors and then continues with our financial aid counselors in college.
School is very expensive. I don’t know why, but someone needs to fix it.
We as a generation like to complain rather than correct. Yes, loans suck, but why can’t we suck it up and do our best to pay it off or manage it? At the end of the day no one held guns to our head and forced us to take out loans. I think this “woe is me” mentality is actually hurting us more than it is helping us.
Now, some of yall might be a little mad or frustrated. Some of you may have taken notes. I want to hear from you!!! Here is a link to a quick survey where you can tell me a little bit more about your experiences with college and student loans.
Alright, that’s it. Lol. As always, share, share, and share again! With your friends, family, enemies, and strangers on a bus! If you would like to know more about financial literacy, check out my blog A Thousand Words Volume 6: Mitchell the Money Mentor. You can also check my monthly Financial Wellness blog in which I discuss tips on budgeting and financial planning.
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Thanks y’all and until next time :)
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