Yep, you read that right. We took out more student loans.
We made this decision a few weeks ago and I haven’t been able to sit down and write about it. And now, student loans are really on the forefront of all our minds with the recent supreme court ruling to block Biden’s student loan forgiveness plan.
To say I am disappointed about that is an understatement… but that’s not what this post is about. This post is about us making the decision to take out MORE student loans and why.
How much do we already have in student loans?
If you’re new here or just don’t know our exact numbers (cuz why would you?), let me catch you up on what we’re dealin’ with.
As of July 2023, my hubs and I have a total of $251,159.39 in student loans.
They are the only debt we have that we are actively trying to pay off.
I say “actively trying to pay off” because we also have a mortgage, but we aren’t wanting to pay that down as quickly as possible. This is for a few reasons: we have a 3% interest rate, we don’t plan on this being our forever home, and one day we might rent it out or sell it!
Check out this post about other debts we had and paid off last year.
Why take out more student loans?
We did not take this decision lightly as we have made big changes regarding the way we manage our money in the last year and a half. We found a budgeting method that works for us, paid off $17k of debt last year, and have avoided taking on any more debt as our goal someday is to be financially independent.
I’m really proud of us that we stopped living beyond our means which we were doing in 2020 and 2021. I’m proud of us for finding a money management strategy that works for us and sticking to it!
So. Back to why we took out more student loans.
Bret is in grad school and recently learned about some upcoming conferences that would be really helpful for his professional growth.
We might have been able to pinch and save but that seemed like a stressful way to go about it. I personally already have some trips planned and I am working extra to cover my travel costs. Adding these conference trips to our budget would cause me to be working way more than I already am.
We could have put these expenses on our credit cards, but the rates are astronomical (like 25%+) and his loans are around a 7% rate. So, still a high rate, but not as bad as our credit cards.
Since we are currently living on my income alone, we know that when he starts working again, we will be able to accelerate our debt payoff using his income. Because of this, we are not stressing too much about it!
How much did we decide to take out?
This is an important discussion because I remember when I first needed student loans, my default was to take the max amount I was offered. Bret has experienced this, too.
This year, they offered Bret about $30,000 in loans.
We talked about anticipated costs and wanted to only take out what we thought he would need. So we decided to take $6,000 and decline the rest.
We then opened a new savings account where we could keep the money to make sure it didn’t accidentally get spent on other things.
He has a full-ride scholarship (because he’s brilliant) and this $6,000 is pennies compared to what we would have needed to take out if he didn’t get this scholarship.
Aaaand over the next two years, I will be getting $88,000 of student loan payment assistance through a state program which will drop my balance (and our overall balance) significantly. So, we are still moving in the right direction.
If you’re someone who needs to take out student loans to reach your goals, that’s okay. You are not a failure! Here are some things I hope you consider:
- How much do you really need for your schooling and living expenses? (Like actually write out real numbers on paper or put them in an Excel sheet).
- Is there a way to decrease your loan burden by participating in a work-study program, applying for scholarships, or both?
- Ensure you understand the risks if you are taking out private student loans instead of federal ones. (Federal is almost always preferred!)
- Talk to professionals in the financial aid department of the school you are interested in to get more guidance and support.
- Check out Nika, @debtfreegonnabe, on Instagram. She has great resources about all things student loans.
Our debt payoff journey is not a perfect or linear path. We are investing in our future and sometimes in this country, investing in our future means taking on some debt (or a lot, in our case).
Even if I had to do it all over, I personally would still take out student loans if they were my only option. It allowed me to have a college experience that I wouldn’t have been able to have otherwise and now I work in a profession that I love. Some would disagree with this mindset, but hey, that’s why personal finance is personal, right?
This journey has been life-changing in helping us reexamine our money values, learn effective money management strategies, and overall improve our relationship with money. I know we will get to where we want to be and our goal right now is to make our journey as sustainable as possible.