Today I saw this article in the Seattle Post-Intelligencer about the new face of poverty: the college grad. According to the article,
About 40 percent of students now graduate with what lenders consider “unmanageable” debt loads, meaning their payments eat up more of their salaries than is considered financially sound.
It may not be financially sound, but it sure sounds familiar. My parents believe that their children are not owed an education, and therefore we each had to pay for our own university costs. I feel this was a very costly decision, both in financial and life terms. One sibling of mine joined the military to get an education “for free” — serving our country for 25 years and still doesn’t have any promised degree. My other sibling put went to a top school — the resulting financial burden strained the relationship with my parents to the point that they haven’t spoken in years. As for me, my outstanding $136,000 in student loan debt costs us nearly $1,000 per month. The truly frustrating part is that the interest accumulates so quickly that some months the principal balance actually increases. This is equivalent to what some of our friends are paying for their mortgages, and it means we can’t afford a home mortgage until we pay off the mortgage on my mind.
This amount of student loan debt has caused us to argue at times. He feels that I’ve already spent so much money that he should get to spend a similar amount on stuff he wants, including his doctorate degree in the future. I feel we have so much debt already that neither of us can afford to spend more. Of course, we are both right and wrong.
My student loan debt is also going to impact our future finances. It will take 30 years to pay off this debt, and of course we will want to buy a home before we’re 55. So that means our mortgage application will inevitably include some student loan debt, which is dragging down my FICO score. So this debt will also cause us to incur more debt than necessary when purchasing a home. Hopefully we can pay the loans down more aggressively in the future and pay them off much sooner.
If you can mortgage your mind, why can’t degrees grow on trees?