The Victims Called U.S. Citizens

I have become a victim along with thousands of others in my generation, hundreds in older generations, and the potential millions of the next generation.  I am a victim because I was born in the U.S. and decided to further my education.

Why are U.S. citizens victims?  Because we have been tricked into debt.  My debt is currently $80,000 (give or take).  And my debt was due to investing in myself.

It is no surprise to those my age that college costs a lot of money to go to.  Most of us now are paying the the penalty of going to school (pun intended).  I got one of the shortest ends of the stick currently:

1. I have debt from grad school on top of college

2. I graduated when the economy still hasn't recovered

3. I have no job-job that allows me peace of mind when it comes to paying the loans back

4. I have no health insurance (well, from a job. I paid for some in case I end up in the ER one day)

I'm living the American way: land of the free, home of the brave, and in a ton of debt.

Of course, no one actually tells you this when you're applying to schools (except maybe your parents).  When looking at schools in high school, I remember the guidance counselor told us all to not worry about the cost of tuition, there are student loans for that.  Well, student loans ends up getting a bunch of graduates in trouble, especially if they don't find a job right away.  There lies the problem: we are being told to not worry about debt.  But what if you don't find a job by the end of 6 months?  Then you not only have a feeling of failure but also a monthly bill from the loan fairy.

I thought about it the other day.  If I didn't have all these loans to pay back, my current job would give me all I need to live comfortably.  Maybe we have it all wrong.  Maybe we shouldn't go to college right away and instead, work for a few years.  That way we have some money saved up to avoid massive loans.  I was able to save a decent amount of money the year between undergrad and grad school where all I did was work.

So what can we do about this?  Well, for 7% of college grads, the answer is to default on their loan.  Another option is to decrease payments by increase the loan term from 10 to 30 years (something I really would like to avoid doing).  A third option is to opt for the cheapest school or the one that offers the biggest scholarship (kind of what I did for undergrad since I knew I wouldn't stop with a Bachelors).  The last option is to go into a field that either allows you to be self-employed or advance in your current company.

Why does America make it feel like a punishment after attending college but yet more and more job fields makes having some sort of college education mandatory?

Forbear-ness Sake

Loan companies can cause headaches: or at least for me in regards to my one loan company.  If you recall here, I had to call the loan company that owns the whale-sized grad school loan about them randomly putting me on deferment because the university decided to tell them I was full-time with zero credit hours being taken.  The loan company then had said it would take a month to take me off of it and for my repayments to start back up.

Well, turns out, they lied.  It took 3 months to take me off.  When I checked my account yesterday to cry over the accrued interest, it no longer said deferment.  It said forbearance.  Which I didn't know what that meant at the time.  I do now though because I wanted to make sure that wouldn't negatively affect me in any way (credit score anyone?).  Turns out it doesn't, at least not if I make payments.



Epilogical's definition of forbearance:  It is just like deferment, meaning you don't have to make any payments.  The only difference is with forbearance, both subsidized and unsubsidized loans accrue interest as opposed to just the one.  So in the long run, you pay more in total when all is said and done.


Now, with forbearance, the loan companies don't just hand these out like candy at a parade.  With my loan company, you have to actually apply for it.  It's usually for if you're having trouble making the minimum payments due to a major financial blow such as losing a job or not being able to find a job.  Or having large medical costs due to illness.  So apparently, I'm special because I didn't have to apply for this (though they were right in knowing making the minimum $800 monthly payments would have been a little hard the past couple of months).  So, I was getting ready to call them and ask what the heck was going on because who knows, maybe they know my main job had ended last month, when I realized something else interesting.  I made a small payment for each of the two loans (why they separated them by each year is beyond me, just group them together for crying out loud) in a vain attempt to keep the interest down back at the beginning of June.  It said the payment was pending.  Pending.... as if my money wasn't good enough for them or something.

I checked my bank records.  Yep, the payment was withdrawn from my account.  So my call was turning into a "what did you do with the $200 I paid you last month?"  Well, they were closed and I would have to wait until morning.  For the heck of it, I called the automated line to get my account information.  This is what they said in a nutshell for both loans:  "Your loan is currently in forbearance status until July 9, 2012 (as in yesterday, the same date as the phone call was occurring by the way).  Your last payment of $100 (per loan which is correct) was received on June __, 2012."

So, after putting ice on my head to numb the pain caused by smacking it against my desk, I rechecked my account online.  Sure enough, the payment did not say pending anymore.  It was applied to the interest.  Which I don't know what to make of this situation now.  Everything looks good (except for the forbearance ending, I could actually use that right now).  And all it took was a phone call to an automated system after a near panic attack and procrastination at posting the payment as occurring.

Moral of the story: when you have a loan, be it student, mortgage, auto, tattoo, whatever it may be, pay attention to what is going on with it.  Print any and all confirmation numbers and make sure payments post properly.  Also, call if something doesn't look right because chances are, it's not and it's better to get things sorted out immediately than later on.


By the way, the total interest accrued for those who are curious was: $1011.16, making me very close to a total of $70,000 for the 2 years of my life in school full-time.



On a completely different note, I had another centipede visit from the Bug of the Month Club late last night.  Unlike the one in the popular 5 Second Girl Dance post, this one started running along the wall when I went to grab a tissue.  I found it, knocked it down, and it ran under my couch before I could catch it.  I think it's still under there because I said screw it and went back to bed when I didn't see it underneath.

Loan Update

Since another month has gone by (and the fact that I need a break from writing cover letters) I decided to give a quick update on my loans.  Currently my totals are:

Undergrad Loan
     Current Balance: $17,369.99

     Monthly Auto-debit: $217.59

     Next Mandatory Payment: October 2013

What do the last two numbers mean?  The monthly auto-debit occurs every month, regardless of whether a payment is due or not.  My full explanation is here.

Technically, I don't have to pay anything in the upcoming months if I don't want to because I'm ahead on my repayment.  Since I'm paying a full monthly payment every month anyways, this date also pushes back a month.  So, that means if I keep this pace, I will have paid off my loan a full 17 months early.  Pretty neat huh?  Well, my goal is to have it paid off in the next 5 years instead, ideally in the next 3.  If I get an actual job in the next 2 months then I want to pay it off within 18 months.


Grad Loan
     Current Balance: $69,536.97

That's all the stats on that.  Why?  Because even though I called them about the mistaken deferment they did, they still haven't taken it off.  Their mistake, so I'm not wasting time calling them again about it.  So I don't have a mandatory monthly payment, though I am trying to pay the interest plus a little extra each month.  Last month I skipped doing it though because of my cat's procedure and I didn't have much money to spare.



What does this mean for Epilogical?  It means I really need to find a job in my field (that pays the amount anyone else with my degree has) so that I can get this all paid off before I'm 35.  My ultimate goal is to be done with it all by the time I'm 31 which will be in a little over 5 years.

Just for fun, the math on paying of my graduate loan (without including interest but if you're curious, it's  somewhere between $100 and $200 a month right now), in 5 years is:

$69,536.97 / 5 years = $13907.39 / year

which means:

$13907.39 / 12 months = $1,158.95 / month (beginning on my 26th birthday)

Of course, adding interest in, this amount increases but you get the general idea, it's a lot.

Is this doable?  Sure, as soon as I land a job-job it is.

The Art of Loan Payoff

It's getting to be near the start of a new month and the official start of the Amazing Loan Race between Katie and I so I thought I give a little update on my situation and add a little advice to all of those out there who have their battle with their loan(s) going on at the end (ie just skip to the end of the post if you rather just see my advice, don't worry, I won't be able to tell so my feelings won't be hurt).

Undergrad Loan

My current total (before future interest) to pay off this loan is: $17,780.77. My estimated monthly payments (beginning in May as mentioned here) is $250.00 (roughly).

Now, I discovered something pretty neat while going through my account on their website that I thought I didn't have the option for this far into the game of payoff. I have the chance to reduce my interest rate by 0.25%. That's right, a mere 0.25%. Now hold off on the eye rolling and calling me a loser for even writing about this. The interest gets tacked on monthly for me. So for me, that means that right now for my current total that equates to a savings of:

17,780 x 0.0025 (yes that's 0.25% when you are doing the math) = $44.45

Meaning I will be charged $44.45 less interest this month. If I sign up right now.  Of course this value will get lower as my total owe decreases over time.  For example, in 6 months, applying the minimum payment, my total owed will be around $16,200.  Let's do some more math..... Okay, I'll do it and you can just see the answer.

$16,200 x 0.0025% = $40.50 saved that month.  Still a pretty good savings eh?  I mean, that's almost the cost of  a night at the Cheescake Factory I could be having instead of paying my loan company that amount.

So how do I get this wonderful deal?  Automated kwikpay (seriously, that's how they spell it).  What that means is that if I let them take out the amount owed each month automaticall as opposed to me manually doing it, they will reduce the interest by 0.25% (enough with the thinking I'm a loser for being excited already).  So when I talked with the loan company how exactly this works I was told there are two options:

1.     They only debit out what is due for that month. So if you recall from my earlier post, they actually wouldn't start debiting until May (September now but the reason is further below) since I don't owe anything until then

2.     They debit out the actual monthly payment whether any money is due for that month or not (so they would take out the amount starting this month instead)

For me, I'm chosing option 2 because I plan on making payments anyways.  There is the added benefit here as well that I won't have to remember to pay every month and worry about any late fees if I forget.  Also, I can still make additional payments manually if I am feeling ambitious (or really want to beat Katie that month for our contest).

Grad Loan

So something interesting happened here... and also happened for my undergrad loan but I decided not to do anything about it as of yet since I'll be paying on it anyways.  Apparently, my grad school decided to send them a letter stating I am currently a full-time student (which is kind of funny considering I am taking 0 credit hours there this semester).  I didn't know about this until I called up the loan company because they sent me an email saying my application for deferment was accepted when I didn't even apply for a deferment.  After getting it back on repayment, I now don't owe anything this month because there's a month delay for it to switch.  My monthly payments for that is $817 and some odd cents. I already have a headache so I don't want to look up how much I owe in total right now for the loan but I think I posted it previously or you can do the math ($817/month x 12 months/year x 10 years - the amount I paid which is about $2,400). This month I have off as I already stated which is good because I need to save up for poor Epa's potential surgery scheduled in a month.

I think they have the reduced interest rate deal too if I sign up for autopay but....I think I might hold off on that until I get a real job.  For those who don't know, I have a job in my field but it's a temporary one that pays about half of what normal people would make who have the same degree.

Loan Repayment Advice

Okay so now the part most of you probably skipped to. Advice on paying off your student loans.

• Don't defer them after they go into repayment.
• If you do have to for financial/school reasons, at least pay off the interest so that the amount owed doesn't get any higher.
• Try to pay the interest amount while you are still in school.  
• If you can, pay more than the minimum amount each month.  It benefits you because either your future payments will be less or your next payment is delayed (like mine does).  Either way it really becomes a benefit if you're a little short on cash one month.
• Hint: the interest you pay on your loans you can claim on your taxes.
• Make a friendly competition between one or more friends :) 

The LOANiest Number

So, this post is going to cover the bane of every college grad's existence.  The L-word.

Loans.

As I said before, I have about 80,000 in loans to repay.  It's actually a couple thousand more but I figure that's a nice round number.  Now, the average loan repayment plan is 10 years in length.  BEFORE including the ever accruing interest, for me, that works about to be:

 $80,000 / (10 years x 12 months/year) = $666.66 per month.

What an evil number.  My undergrad loan, after making a voluntary payment a few days ago (the reason it's voluntary will be explained shortly) is under the $18,000 mark.  It's $17,751 and some odd cents.  So, working the calculation for this loan alone and accounting for the fact that it's been in repayment for about a year now, they want $217 a month in order for me to have it paid off by the magic 10 year mark.  Okay, that's cool.  But, I don't want be dealing with this when I'm in my 30s.  My goal is to have this one paid off in 3 years.  Why 3 years?  Because 1 year would make me broke and in 5 years I will be 30 (I'm 25 now if you're like me and can do complex math and simple math skills disappears to make room for it).

I have a friend who is doing a blog with the goal of paying off her under grad loan in 1 year.  If you're interested, her blog is here. I thought about challenging her to see which of us can pay off our undergrad loan faster but that might be a bad idea since:
1. Hers is about $7,000 less
2. She deferred her graduate loan (which is the same amount as mine by the way) for a year to do this.
3. It would just be mean if the winner bragged to the loser
4. I think she would win

Okay, so 3 years.  Adding money for evil interest that works out to roughly:

$17,800 / (3 years x 12 months.year) = $494.44 per month

Still a good chunk of change.  On average right now, I pay $200 a month.  Now before you say that an extra $300 can't be that bad if I have a graduate degree (or will very shortly anyways), I am also paying $820 a month for my graduate loan which sucks and I'm not even going to touch trying to get that one done early for a couple more years.  That might deserve it's own blog in a little bit.  So with my income right now, kind of stretching it there.  Will I try to do it? Yes.

Now to a point I mentioned earlier about my VOLUNTARY loan payment this month.  My loan company seems to have the repayment bills set up so that if I pay more than necessary one month, they will take that amount OFF the next bill.  As opposed to making all the subsequent payments less which I don't know if that would make me feel better or not since it would probably only take $1 each.  Since I've been a good girl with making payments over the required amount, added the fact that payments were being made while it was in deferment, I haven't had to pay an official full amount payment to date, about $217 I think because that's currently the amount I owe May 1st.  Yep, I technically don't have to make another payment towards that loan until May if I don't want to.

So there you have it, my official undergrad payoff goal.

I'm thinking my next post will shake things up a bit and post about my current job search and application woes.