Where’s Doc’s DeLorean so I can go teach 20-year-old Justine a thing or two about financial health?
There are several things I wish I knew in college about student loan debt that I know now. Had I known these things in my collegiate years, I would have entered the workforce financially stable with a realistic plan to tackle my money goals and student loan debt.
In honor of #FinHealthMatters Day AND the fact that it’s the perfect day for weather:
Difference between a subsidized and unsubsidized loan
Student loan debt usually comes in two popular forms: subsidized and unsubsidized loans. A subsidized loan is needs based and interest does not accrue until you begin repayment. Repayment usually occurs after a six-month grace period after you graduate. An unsubsidized loan is not needs based and accrues interest as soon as the loan is distributed to your account. That means the U.S. Department of Education charges you interest on every unsubsidized loan you accept throughout your time in college. I received notifications with $1,300 in accrued interest over the four years that I was in school because I never made payments until after graduation. Unsubsidized and subsidized loans make up the largest type of outstanding student loan debt.
How to lessen the burden of student loan debt
Had I known the difference between subsidized and unsubsidized loans, I could have actively started paying on the interest from my unsubsidized loans while I was in school. Even if I had thrown $20 per month towards the interest, I could have decreased total interest paid by $960 over the four years that I was in college. Paying ahead of time saves money in the long run.
“Paying ahead of time saves money in the long run.”
Interest Rate: Deferment Length:
How much student loan debt sucks after graduation
When you make it to graduation day, you’re mainly looking forward to the new job you landed, a better apartment and trading in your clunker for a nicer car. That’s what older generations told us to do right? What I didn’t fully realize is just how much student loan debt sucks after graduation. According to Student Loan Hero, the average student loan monthly payment for millennials ages 20-30 is $351.
U.S. Department of Education = $122/month
Sallie Mae = $51.53/month
K-State Foundation = $50/month
Total = $223.53/month
How a budget works and how to use it to my advantage
Mapping out my income and expenses in a monthly budget would have saved me hundreds if only I had started my freshman year. When you create a budget, you actually create control. Most of all, you get to decide where your money goes and how you want to save, spend, and invest it. Yes, even you vivacious freshmen can invest! You go, Glen Coco.
“When you create a budget, you actually create control.”
If I were to go back, here’s what I would have budgeted for in college:
✅ Car maintenance
✅ Sorority dues
✅ Mutual fund investment
✅ Student loan interest
✅ Season athletic tickets
How to maximize my free time to earn cash
In my mind, I was working 3x as much as my friends during college. I worked a lot of nights and weekends as a server, but I also held a marketing internship with the College of Engineering during my senior year. I worked around 25 hours per week, including summer. Even with that workload, plus going to school full-time, I wasn’t using my time as effectively as I could to earn extra income.
- Work full-time during the summer, so you don’t have to work at all (or as much) during the school year.
- Sell books, clothes, home decor, and more on buy/sell sites like Craiglist or posting on Facebook. (now we have great apps like LetGo and OfferUp)
- Earn cash by taking online surveys. Survey Junkie is my go-to.
- Become a peer tutor. Check your university’s requirements. Many require at least a “B” average in the class you wish to tutor for.