Saturday, June 14, 2008

Living Debt Free--Part 3

Are School Loans Wise?
Advice for Young People

(Some of you may disagree with my perspective presented here. That's okay! I'm not claiming to have all knowledge and wisdom on the subject of living debt free. I just want to share, as a testimony, what we have learned from our own experiences on this subject.)

I recognize that sometimes school loans do pay off. We know a gal who borrowed $17,000 and got a 4-year nursing degree and immediately made $40,000 a year fresh out of school. Because she didn't marry until 5 years out of school and lived with her parents a lot of that time, she easily paid it off. However, there are no guarantees. If you somehow change your mind on a Major mid-schooling, get sick, or get swept off your feet by an unexpected romance that leads to marriage and you are unable to finish school for some reason, that's still a huge chunk to pay off! This gal could have chosen a local college instead of one of the priciest Christian schools in the nation and could have probably gotten her degree for half of that. But the benefits of going to the school she wanted to go to were worth that much to her and it worked out in the end because she chose a profession where there is constant demand and endless job opportunities. On the other hand, I have another friend who is very frugal and got a degree in a field she enjoys and tried not to take too many loans but ended up owing at least $15,000 after 6 years of college. She CAN'T find a job in her field, didn't marry, doesn't have parents around to live with, and is stuck trying to survive on a minimum-wage income and just meet her basic needs as well as the basic loan payments. It's going to take her around 20 years to pay school off at the current rate!

I think it is up to an individual to weigh their options and decide if they will take the risk of school loans or not based on the education they will receive and the payback in the end. I personally will advise my own kids to try to save up, work during the summers, and take a year or two off as needed to get through with the least debt possible. There are no guarantees when it comes to the job market or whether or not you will be able to finish so I would rather play it safer. My brother told me about a gal who attended med school and took about $200,000 in loans only to discover when she dropped out near the end, without a degree, that bankruptcy does NOT apply to school loans, so by claiming bankruptcy, it didn't clear them as she had hoped it would.

I don't regret going to the college I attended and I am glad my parents did advise me not to take out more loans than I could pay back in one year of working a minimum-wage job. If I had to do it over again, I'd probably have tried to take a semester off here and there or might have worked an extra job in the summer just to avoid any and all loans. If I had been going for a 2 year degree that demanded so much of me (like nursing) that I couldn't work much on the side, I may have still taken a few thousand in loans, with the knowledge that I would have a good job after school to pay it back quickly. I would have paid it off before going on for more schooling.

My personal views are that young people with a heart for ministry or for being a stay-at-home mom someday should look for as many alternatives as possible instead of getting school loans. Don't underestimate the power of God to fund your education! I really believe that God cares about this detail of our lives and wants to build our faith and overwhelm us as we seek His provision for this area of our lives. While I don't think it's necessarily sinful to sign on the line, I do think we are more quick to trust in financial institutions than in God for provision for college. I have been the recipient of an anonymous gift of $2,000 for my education as an answer to prayer! It's amazing how different scholarships and grants came through for me and how God helped me stretch my miniscule budget through the college years. It was great to work in the college kitchen too and get free meals and free leftovers! When we married, we had a combined total of $77,000 worth of Biblical/missions education and owed only $3,000 (my school loans).

One older gentleman pastor I met said he had been paying on his school loans for 30 years and still owed a ton on them. He exhorted me and another college student to do whatever possible to avoid that hardship. I know from personal experience when we were missionaries for a summer, and from my many friends who are in ministry now, that ministry salaries are hard enough to live on without having loan payments!

Though we attended a very small Christian college that cost about half of the price of the bigger colleges, the average student graduates with $22,000 in loans. Most fulfill the joking prophecy that it's a "Bridal" college and obtain a spouse while there, doubling their debt to $44,000. What a way to start a marriage! It would be wise for a young person to choose debt-free living as a way to honor and bless their future spouse. If you have already found the one you want for life, you need to consider how debt will affect your marriage and seek to pay off as much as you can before marriage. It may not seem like a big deal when you're in the fog of falling in love, but it will be difficult if money is tight and hard times hit, putting a strain on you as a couple. Even couples who try to avoid having kids right away, giving them time to get on their feet financially, are not guaranteed that kids won't come anyway. (I have lots of friends that are proof of this!) If you go into marriage WITHOUT school loans, you will have a headstart on life.

I'm very proud of my friends who are struggling with paying school loans back and are chugging away at it right now as they raise young kids, inspiring me with their amazing frugalness and dedication. Their milestones in the debt-free journey excite me and fill me with great joy! Some of them were pushed into signing forms by the financial advisors at school or by a parent or they married someone who had a lot of debt for the same reasons and now they are becoming incredibly resourceful and creative in working towards the goal of being debt-free! Keep up the great work! Share with me your progress, however small it may be!

Did you use school loans to fund your education? If you had to do it over again, would you change how you did things?


bonnie said...

Mrs. Jo I was wondering if you might post about what your view is about Christian young people who go to secular colleges, whether away or at home. Like what would you advise your children to do. Would you restrict them to Christian only and how would you go about helping them find a "good" secular college. Mainly what are your thoughts on it?? I am 15 and will hopefully graduate a year early and this has really been weighing on my mind and your thoughts would be greatly appreciated!!

anna said...

i can vouch for the difficulty of paying student loans! I went to bible school for 1 year and a university for 4 years and was completely on my own to finance it. I was not educated in the best way to finance student loans, and while i did qualify for decent loans that were deferred while in school, i was not educated on the stupidity of taking out more than i needed so that i could buy my books, a computer and other items. When all was said and done and I was done with school, i consolidated my loans to find out that I had $30,000 in loans, and a degree to teach elementary school, which doesn't even pay $30,000 a year! My husband was extremely overwhelmed, as he did not go to college and instead worked himself up the ladder at walmart and now makes more than i ever will teaching. It has shown me that college does NOT necessarily mean you are guaranteed a great job. Not to say I regret going, or would encourage anyone not to go, but seriously weigh your odds, and maybe go to community college, or a 9 or 18 year program specific to a certain profession. While I had a blast in college, it gets harder and harder to pay on those loans every month. Good advice, Lindsay and I would like to add that you must be wise in the decision to take out such huge loans for college. And know that even though those payments seem to be way out there in the future, you DO have to pay on them someday! They never go away and they aren't usually very cheap!!

anna said...

i must make a correction to my comment--i wrote 9 or 18 YEAR program and obviously meant 9 or 18 MONTH program.....YEARS???? NO way!!

Nicole said...

I think in terms of deciding whether or not to take out a student loan you have to look at what you're career will be and what you'll make in that career. A friend of a friend is pretty much guarenteed a job out of college for at least $100,000 a year or more. For her I definitely think it's worth it.

I don't regret my college years at all. I didn't have a ton in student loans although we do still have a small amount left to pay off. If I did it over again I wouldn't use student loans.

Suzanne said...

I wa extremely blessed with college, as I graduated debt-free, thanks to a combination of scholarships, working part time, and parents who paid half of my living expenses! I briefly attended graduate school and racked up $10,000 in loans there. Not such a hot idea in my case.

I dropped out to get married (yes, I wanted my Mrs. degree...) and determined that I would not enter marriage with debt. I put everything I could toward that loan and paid it off in 6 months. (my parents also graciously let me live at home with without charging me rent, as long as I contributed to the groceries and other household expenses.)

Currently, we are determined to not take out loans for my husband's seminary degree. It's hard and we're blessed to have some family support, but I know we will be glad we're doing it this way.

The Three 22nds said...

My husband and I both got our degrees from a Christian Liberal Arts college (expensive!) and he got his masters from a private school as well. (we graduated from college 7-8 years ago)

I managed to get out with no student loans and he came out of his bachelors with under $5000, He was actually paid for his grad work.
Here are things we did to save money:
1. We applied for and were both accepted into the Post Secondary Education Option our senior year of high school. I don't know if all states do it, but basically, if you get good grades you can apply for and attend college your sr year of high school, all at the states expense. There are also a lot of colleges that offer distance ed or public schools that offer college credit classes that can be done during high school. All that saves a ton of money!

2. We picked a school close to home so that we could live at home. Saved us thousands of dollars! And our parents didn't charge us rent since we were actively pursuing degrees, working part time and saving money.

3. We both worked part time, worked during the summer too. I did better at this because I am naturally a saver and my husband is a spender. My parents contributed to my college tuition too. My dad didn't want me to work a lot during high school because he was convinced better grades would be worth more than any minimum wage job I would have. He was right!

4. We got married after my Jr. Year. Combined with scholarships and financial aid I paid $1400 dollars for the school year my senior year- at a $15,000 a year school! Not that I recommend marrying just anyone for a tuition discount :)

5. We both went into fields where we could get a job. Noah graduated with a physics bachelors, and me with nursing.

6. Grad school. Noah went to the program that was going to pay him a stipend to do research for them as part of his schooling. They gave us almost enough to live on, and I was also working fulltime so we were also able to save up some. Of course we spent way too much of our money eating out and having fun...but you gotta do a little of that before you have kids :)

Kristen said...

I think your ideas on the subject should be a class in school to teach young people about money, especially at Oak Hills because so many people that attend there have either been super sheltered and not had to deal with money OR they have sort of raised themselves and had no education in the matter. When "Troll" and I got married and I was able to consolidate everything we owed, it ends up being around $35,000 - still and we've been paying on it for 3 years. We just bought a motorhome and are considering living in it so that we can put together enough money to clear out our debt.

If I could influence someone's decisions about the ministry, I would tell them not to go to school, but to educate themselves by reading lots of books, and finding a good/knowledgable mentor (a pastoral type) and just go out into the ministry. God gives ability to the willing and His message is one of mercy, justice, caring for each other and sharing resources in such a manner that money is not the concern, but loving others is. You don't need a degree for that kind of love/servanthood. There are plenty of things that need to be done in the missionfield that can be learned in an apprentice style environment. Not that schools aren't worth going to persay, but that not everyone needs a degree and sometimes it is not the best stewardship of money that we don't have.

Mrs. Jo said...


I'll address your ? in a post today or tomorrow. Thanks for asking!


Thanks for your honesty! Good advice! (Yeah, an 18 year program would be a loooooong time =)


It's true there are some who really do well with the school loans, like your friend. I'm guessing she's becoming a doctor or lawyer?


Sounds like you were smart! I'm glad that you are doing it debt-free through seminary even though it's hard. I pray that God blesses you and provides for all your needs. Thanks for your comments.

3 22nds,
GREAT ADVICE from someone who did it for hardly anything! Sounds like you and your hubby were really wise and both got really great degrees that can easily pay off the small loan that was necessary! Way to go!


Amen! I agree that apprenticeships are the way to go and that schooling is not always worth going into debt for. While I don't regret college, I could have gotten the same info and knowledge by auditing classes and reading lots of books. I wish you and Troll the best on whittling down that big chunk. I agree that more Oakies should be warned instead of pushed into signing up for what will be YEARS and YEARS of payments.

The Three 22nds said...


my college had a class called "Math for the 21st Century". It was a class that had units on mortgages, car buying, gambling etc- all really practical stuff. It defined terms and showed very clearly how much interest really costs! It was at a Christian college and I think there was some discussion about Biblical concepts related to money, but I don't really remember specifically.

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