I Chose the Expensive Private University — And Got the Debt to Go With It
I have $129,240.55 worth of student loans from my undergraduate degree. This is far more than most people, but I also know I’m not the only one in this situation.
I applied to three colleges. I wasn’t terribly interested in Wright State University, but it was only a few hours from my home in northwest Ohio, and offered the major I was interested in (film production). Bowling Green State University was a very local state university that didn’t offer my major. And New York University was notoriously expensive, but was reputed to have one of the best film programs in the country. I was accepted to all three, but the real decision was between the latter two. Bowling Green State University offered me a full ride minus housing, and NYU offered a combination of scholarships and grants that would cover half the cost of tuition and housing (about $50,000/year).
I assumed that finding a job in the industry would help me pay off the loans easily. I know my parents tried to talk with me about what this would mean in terms of debt, but being 17 and from a small town, I was dazzled by the prospect of NYU and, frankly, money in amounts over a couple thousand meant nothing to me. I had no frame of reference.
My mom was a non-profit attorney, and my dad was in local news production, and their combined income wasn’t enough to contribute to my tuition. They were (and are) extremely supportive, and sent what money they could whenever I didn’t have enough to eat (and emergency funds when I studied abroad and was apparently not too great at calculating exchange rates), but everything else came from a combination of federal and private loans. I held a handful of jobs during school and in the summers between semesters, but the bulk of that money went toward funding film projects, saving for my semester abroad, and just meeting general expenses in a costly city. (Then there was an unfortunate car accident that occurred in the line of duty at a summer pizza-delivery job, meaning the bulk of my earnings went right to repairing a bumper and headlight).
That my dad was also studying towards a master’s, or that I had a younger sister just reaching college age, are facts that FAFSA doesn’t take into consideration. On top of that, three years into my degree, the FAFSA criteria changed, and it was determined my parents should be contributing well over 50 percent of their income to my tuition, which cut the amount I was getting from the Pell grant. I made up that difference in private loans, too.
Repayment options are far more limited for private loans, which I did not realize going in. My $15,000 of federal loans have totally doable repayment amounts (one is $110 monthly, and the other is $190 quarterly), and I can defer them for three months at a time by filing online if I lose my job or am experiencing financial hardship. I’m making regular payments, and they don’t feel like a burden.
For the $113,000 in private loans, however, Sallie Mae charges $150 for the privilege of putting them in forbearance for three months (and of course that isn’t applied to repayment). I did this twice: once right out of college when I was looking for a job and needed the extra money for the deposit on an apartment, and once a year later when I was laid off. I’m currently making interest-only payments, which, for me, is $550 per month. In the four years since I started repayment, I’ve paid Sallie Mae nearly $25,000—the bulk of it interest. And actually, thanks to interest that accrued during the grace period immediately after graduation, and during the months I’d gotten a forbearance, the total I owe has actually gone up, from $113,315 to $113,694. Even the income tax deduction for payments on student loan interest (which includes federal and private loans) is only $2,500, laughably short of what I pay in interest each year.
When I was first applying for the loans, I was told over and over that immediately after graduation, they could be consolidated and I could get a lower interest rate. Right about then, however, the economy collapsed, and when banks started limiting what loans they offered, student loan consolidation was virtually eliminated. Only a handful of banks offer private loan consolidation now. I’ve applied at two—the first was turned down because I needed a cosigner. The second time, I applied only for my two highest interest loans, about $40,000 which is currently at 8.25 percent interest. This time, the bank turned me down for having too high a debt-to-income ratio, which seems counter to the whole idea of consolidation loans!
Going into this, I had a vague idea of how loan repayment would affect what I could save or what I could spend on rent, I really wasn’t prepared for the emotional toll of debt. More than once I’ve wished Sallie Mae adhered to the Old Testament-sanctioned debt repayment options so I could just trade in my first-born baby and be absolved. I’ve resigned myself to (probably) never owning property, and I’ve definitely daydreamed about all the things I could be doing with an extra $25,000. At one low point, my husband found me crying in the living room in the middle of the night. Earlier in the day we were talking optimistically about career-related ambitions, about the possibilities of my doing freelance compositing and motion graphics, or his doing music performance and composition full time. I’d felt before how constricting debt could be, when fantasizing about long cross-country trips I couldn’t afford to take, or career changes I couldn’t risk, but now that someone else’s dreams were entangled with my own, it was worse.
My husband is a big part of the reason this all hasn’t completely crushed me. We pool our income and share all our expenses, and between us we have enough for groceries, rent, and the occasional drinks or dinner with our friends. We monitor our budget pretty closely with Mint, which has been a tremendous help. We also just paid off his (smaller) student loans from the U.K., so we’ll be able to start paying the principal on my private loans. He’s very supportive and understanding, and his level-headedness helps me keep things in perspective. I know I’m lucky to have a partner so ready to stand by my side in this. I feel grateful for my parents, as well. They have done everything possible to smooth out the bumpy post-grad period, whether it was making multiple 10-hour car trips to help me move, or becoming a guarantor on a lease, or letting me move back home for the month I was unemployed.
I was able to find a job in my chosen field, which is also lucky. I’m pretty junior, and don’t make a huge salary at the moment, but there’s a lot of room to move up the ladder. If I stay in this field, it’s conceivable that someday I’ll earn enough to actually pay off my loans completely. Even that is kind of hard to imagine, so I’m also preeetty keenly interested in HR 4170, the Student Loan Forgiveness Act. It would introduce IBR and bankruptcy options for private loans, as well as caps on how much debt can be forgiven for incoming students.
Most of my regret comes down to lack of information. I wish I’d known more about private loans and the crippling repayment terms and interest rates. It’s incredibly disheartening to see how much money I’ve given to Sallie Mae while losing ground on my debt. I should have done more research on what a reasonable amount of debt is for an undergraduate degree, and that I’d had some guidelines to follow (like, perhaps, the proposed cap in the Student Loan Forgiveness Act). I wish I’d thought harder about the opportunity of that full ride at state college, rather than dismissing it so quickly. And even if my heart was set on moving to the city, I wish I’d looked into more colleges than NYU, or found a Fancy College that wasn’t notoriously stingy with financial aid. At the very least, I wish I’d been able to take a year off before college to do some more research (although this was before the Affordable Care Act, so taking time off would have meant losing coverage under my parent’s health insurance plan). Hopefully talking about all of this can help other people make better decisions.
Betty LG Cameron lives in Brooklyn, does visual effects in Manhattan, and occasionally posts on her tumblr.