Friday, March 11, 2016

Am I a Fool?

As you all know, because I have exclaimed loudly, proudly and repeatedly, I finally paid off my student loan debt earlier this year.  It was a huge weight off of my shoulders.  However, I have always wondered if I was a fool for paying it all off.

I have a friend who graduated with approximately $200,000 in student loan debt from law school! She is determined to utilize the Public Student Loan Forgiveness program to erase all of that debt.  She has to make payments on the loans for 10 years and work for, in her case, the State (or some other qualifying employer) for that entire 10 year time period.  She is on a income based repayment plan, which means her payments are about $700 a month.  All and all she had a pretty cushy job.  She makes about $70,000 a year, she has a retirement plan (to which the state contributes a portion) and she receives about 6 weeks of vacation time a year.  Her job is pretty secure.  The only uncertainty is, will the Public Student Loan Forgiveness Program still be around, in the small form as it is now, when her 10 years are up. 

It took me 10 years to pay off all of my debt and I paid over $75,000 back in total (the loans totaled about $61,000 before interest).  I now make $80,000, have 3 weeks of vacation time and no retirement plan (ROTH IRA it is). Oh and I paid back every penny that I owed- less about $3,000 that I received as an employment perk several years ago.


Okay, tell me was I silly to make all of those monster debt payments?  I could have stayed with the State for 10 years and paid, probably, a small payment and gotten the majority of the loans forgiven.  (I promise if I was still working for the State my salary would probably only be in the 60,000s and when I first worked for the State I had so much debt that my discretionary income would have been minimal.) I would not have had to make $2000 payments in order to pay it all off and I could have kept more money for myself in the long run.    

12 comments:

  1. 10 years is a long time though. What if you hated the job or at year 6 you got a new manager who drove you nuts? What if you got to year 9 and they did away with the deal? What if you had met and married someone and they got a new job in a new state and wanted you to move? In the 12 years since I have graduated college I have worked at 3 companies and lived in 3 different states. I am glad to have the freedom to move around if I want rather than be stuck somewhere for 10 years.

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    1. It took me 10 years to pay off my student loans. I made only the minimum payments for the first 4 or 5 years. If I did the public student loan forgiveness it would have taken me 12. (I started with the State in 2005, public student loan forgiveness was not signed into law until 2007, the first eligible payouts or forgiveness won't be until 2017, e.g, 10 years.) In my almost 11 years of work life I have had 4 jobs (all in Florida).

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  2. I agree with Kay. 10 years is a LONG time to be a slave to one company - no matter what benefits. Now, you do have the freedom to look elsewhere and really find a job you like.

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    1. Very true, but if the benefit is that great (in my friend's case $200,000 of greatness!) it's kinda hard to say no. Also, there are so many State agencies here in town it would take you 10 years to run through all of them! All in all I'm glad I paid them off.

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  3. If she has to pay 700 a month in 10 years she will have paid 84.000. This is more than the 75.000 you paid, you have the pride of having it paid all yourself and secure that you are not waiting on a program that might not be there any more. Or a jobloss before the 10 year mark that might stop you from having your loans forgiven. You now earn more money and have the freedom to choose any job you want. You are the true smart one here. Well done.

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    1. Thank you! I'm definitely glad that they are paid off. Student loans are definitely a weight on your shoulders. I worry for my friend that they will change the program requirements and she will be stuck with $200,000 of student loan debt (I think her payments now are going mostly to interest).

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  5. I think you're smart to pay it off. Now you can just work on building wealth. AND WHAT A SENSE OF PRIDE YOU MUST FEEL. Way to go!!!!!!

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    1. Thank you! I'm trying so hard to build wealth! I think it was much easier to pay off debt. I have so many competing interests when it comes to paying off debt.

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    2. I agree about the paying off debt vs. building wealth. I wonder if when we're paying off debt it is almost crisis mode and we think of nothing else. When it's building wealth status we may relax a bit. Or, maybe we just get financial fatigue, ha.

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  6. You are smart to pat off your own loan and now own your decisions regarding your job, location, etc. I've seen people be miserable in jobs for years as they wait out the 10 years.

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    1. I can only imagine how horrible it must feel to be stuck in the same job for 10 years. Although, you can move around to any qualifying job and still qualify for forgiveness, but it has to be with a public employer. I just always wonder if I am a fool to not take advantage of these programs since they are there and available. I tend to always take the hard way!

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