Do You Really Need a Loan to Go to College?

A Simple Look at How Student Loans Work

About 18 million people in the United States enroll in some form of higher education each year. Most of these people apply for a student loan and get it, whether it be subsidized or unsubsidized.

The funny thing is: student loans are given on the basis of the entering student's family (not just the student's) income. This means that how much your parents make determines how much you are able to get, and whether you will be able to get a subsidized or unsubsidized loan. And yet you will be the one responsible for paying back the loan once you graduate from college. Typically, the first loan payment is expected six months after you graduate.

For subsidized loans, the government pays all the interest while you are in school. To qualify for one of these, your family's adjusted gross income typically needs to be between $50,000 and $100,000.

Most entering college students receive unsubsidized loans, in which the unpaid interest is added to the loan balance. This leads to a significantly higher final loan amount.

My Story

When I was in high school, it was understood that I would go directly to college after graduation. There was no question. My parents made the mistake of telling me I could go to whatever college I wanted to. So I, not understanding the financial implications of my decision, chose an out-of-state private school.

I did get some grant/scholarship money, but the bulk of my college financing came from unsubsidized federal loans because my parents made too much money for me to qualify for any better type of aid.

As I stated before, I did not understand what having all these student loans in my name would mean to my financial future. I just relied on my parents and Sallie Mae to help me make the right decisions to get the education I desired.

Twelve Years After Graduation, I'm Still Paying Off My Loans

Actually, I should say, I've recently worked out a repayment schedule with a collection agency that picked up my account after I was unable to meet my $150+ per month loan payment.

I did graduate from college, but I didn't get a really high paying job, and then I had a baby, so all my money went to providing for her.

I can honestly say that student loan significantly contributed to my ruined credit. Fortunately, by working out another repayment schedule, my credit will be repaired. I just hope I can continue to make these payments, which is going to become even harder, since I'm expecting my second baby any day now.

If I Had It to Do All Over Again, Would I Change Anything?

You bet! Granted, hindsight is 20/20, and I had some specific things in mind when I made my college selection. I "had" to go to a small school, and it "had" to be out-of-state.

Unfortunately, I passed up the full scholarship my home university was offering me, and even a free ride to the University of Alabama-Birmingham (because it was too big).

Knowing what I know now, I would definitely rearrange my priorities and go for whatever school offered me the most money, even if wasn't the best school. After all, a college degree is a college degree. Several years after you obtain the degree, the name of the school isn't even that important. And the name of my alma mater has changed since I graduated, anyway, so no one even recognizes the name anymore.

But Don't I Have to Have a Loan?

No! Absolutely not! 

There are tons of web sites that offer information about free college money. And your high school counselor should be able to hook you up with some good opportunities, as well. 

And, if your grades and test scores are really good (or if you're a really good athlete), you should be able to get some great scholarship offers. 

Even if You Can't Get a Scholarship, Try Other Things Before Getting a Loan

If you are absolutely unable to obtain any decent scholarships to get into college, there are other options.

You can go to a local school (in-state tuition is usually much cheaper than out-of-state tuition). And one of the benefits of going to a local school is that you can either live with your parents (hopefully rent-free, if they'll let you), or you can share rent costs with friends who are also staying in town.

Try taking a lighter course load so you can get a decent paying part-time job to help defray some of the tuition and book costs, and any other expenses you have. It will take you longer to get to graduation this way, but it will keep your financial future more secure. 

And, if all else fails, get a job first right after high school and save up the money you'll need to go to college. This probably will take a while, but think of the piece of mind you'll have knowing that everything is all paid for.

This sounds like a whole lot of work, and it is compared to my own college experience, but it will be so worth it!

The Question to Ask Yourself: Do You Really Want to End Up Like Me?

I am almost 34 years old, and I'm still paying off my student loans (and don't forget, I've wrecked my credit in the process). At the rate I am going, I will be paying off these loans for at least the next 10 years.

And did I mention that I have two daughters who will also need to go to college? I haven't even hardly begun setting anything aside for their college educations, so I'll probably end up having to give them this same advice.

Avoid going into debt at all costs. Yes, education is important, but it is definitely not worth ruining your complete financial future.

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Comments 6 comments

Simone Smith profile image

Simone Smith 5 years ago from San Francisco

Thank you so much for sharing both your personal story and some helpful advice! Debt can be a really tough thing to take on, and it's important to share the downsides, since so often we only get blasted with the prospect of getting fast money. I appreciate the way you've organized the Hub, and love the photo- it looks like it was taken on my old college campus! Good times :D


workingmomwm profile image

workingmomwm 5 years ago from Kentucky, USA Author

Thanks, Simone. I'm glad you enjoyed the hub. Did you go to Dartmouth? I think that is actually a picture of a building on campus there. Not sure, though.


AshleyRB profile image

AshleyRB 5 years ago from United States

Thank you for posting this! I am currently going through this right now! I went to community college for about a year before transferring to an in state university that's costing me 8 grand a semester! My parents REFUSED to let me get a private loan....and I'm glad they did that!

I still got federal loans which added up to half of the money I needed and my parents are struggling to pay the rest. I need all of the advice I can get so I won't need to pile on to the small debt I have right now. Thank you for writing this! It gives me hope for the fall :)


workingmomwm profile image

workingmomwm 5 years ago from Kentucky, USA Author

Hi, Ashley. Glad I could help!


AshleyRB profile image

AshleyRB 5 years ago from United States

Oh and your baby is a cutie pie! :D


workingmomwm profile image

workingmomwm 5 years ago from Kentucky, USA Author

Thanks, Ashley. My new profile pic has both my babies in it. I'm so proud of my two beautiful little girls!

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