What I Wish I Knew About Student Loan Debt That I Know Now

Tuesday, August 7, 2018

By Justine, from Debt Free Millennials

Forget student loan debt. When I think about my college experience, it’s filled with memories of purple everything, late night study sessions at Hale Library, $2 You-Call-Its at O’Malley’s, and being flat broke.

Me and my girls. All purple. Cheap beer. K-State Wildcats. And dirt poor!

I was clueless in my early 20’s when it came to money. Student loan debt was racking up quicker than my bar tab. I held a part-time job serving at Chili’s and most of that cash was spent on rent, food, and the bars. I hardly had any savings and often received tuition refunds because I was taking out more loans than I really needed. In addition, I didn’t keep up with maintaining my car (I once drove 40 miles with a nearly empty oil reservoir. Oops. Luckily that car lasted me 11 years.) As a result, I was a money mess.

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.

I wanted to share these money takeaways with you. Let me know if you identify with any of these key points and what you’re doing now to actively improve your financial health.

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.

Denominated in billions. Resource: and National Student Loan Data System.

If you’re still in school–keep this in mind. Most student loans include compounded daily interest. (That’s interest upon interest, which only increases the total of the loan and that’s not a good thing.)

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.”

Example: Let’s say I took out a $5,000 unsubsidized loan and kept it in deferment for 36 months. You are not required to make payments during deferment, but you are responsible for any interest that accrues during deferment.


Total Debt:$5,000
Interest Rate: 5%
Deferment Length: 36 months
Repayment Term: 10 years
Monthly Payment: $53


Total Debt: $5,750
Interest Rate: 5%
Repayment Term: 10 years
Monthly Payment: $60

Because I was lazy, it cost me an extra $750 to take out that loan. I don’t know about you, but there’s a lot of things I could do with $750 versus adding it to my student loan debt.

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.

Here’s how my payments looked:
U.S. Department of Education = $122/month
Sallie Mae = $51.53/month
K-State Foundation = $50/month
Total = $223.53/month

Did I mention the job I landed after graduation only paid $10/hour? Yup. Talk about a big, fat fail in terms of how I was doing in life. And I was back living with my parents. Double fail. If I had understood the gravity of how much student loan debt just… SUCKS, well, I would have paid more attention to my coin in college.

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!

“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.

There are a ton of ways to earn extra income as a college student. Here’s a few I wished I had done!

  • 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.

As a student, you should be aware that your academic life and personal life are linked to your financial life. The more you pay attention to tuition, student loan debt, and what you value in life (i.e. what you spend money on) the more your financial health grows.

This blog post originally appeared April 25, 2018 on Debt Free Millennials as a part of Financial Health Network’s #FinHealthMatters Day. To learn more about FinHealthMatters from Financial Health Network, sign up here.

*All views and endorsements expressed in this blog entry are solely those of the author and do not necessarily reflect the views or endorsements of Financial Health Network.

By Financial Health Network on August 7, 2018.

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