In June 2006, I signed my life away to Sallie Mae, one of the nation’s largest providers of private student loans.
It was so easy.
New York University informed me of how much money I needed, Sallie Mae offered me a loan for that amount and I signed on the dotted line.
No one made me read the fine print, no one taught me about interest rates or defaulting and no one encouraged me to consider the future consequences of these loans.
I took on the financial burden of paying for college alone and moved to one of the most expensive cities in the U.S. to attend one of the most expensive universities.
I started with a $30,000 loan, but transferred to UNC after my first year at NYU.
And now, after two years at UNC, I have had the sudden realization that I have accumulated $45,000 in student loans and that in just one year I face the reality of graduation.
UNC ranks first among the best values at the top 100 U.S. public universities, according to Kiplinger’s Personal Finance magazine, but for all of us out-of-staters, I feel your pain.
Those of us who didn’t quite qualify for federal aid and those who need extra money for one reason or another — our options are limited.
Drop out of school, get a third or fourth job, sell our vital organs on the black market — these choices are not exactly feasible. Loans are often the most attractive and accessible option, but we are not always fully informed before we borrow.
We are often told that student loans are “good debt,” meaning the loans will yield a higher future return than their current cost.
This is not necessarily a false accusation, as some studies have shown that higher education is correlated to a higher salary.
However, a higher salary does not always mean that your loans qualify as good debt.
Student loans can cause a trap, in which you must take your first job option because you need a stable salary to pay your bills.
This job is supposed to be only temporary, but as the weeks pass and the bills keep coming in, you stay in this job, score that promotion and find that you just cannot give up the paycheck.
Your job’s purpose is to make money, but that money mostly goes toward bills, which largely go toward paying off student loans.
Of course, students should not take this as a call to action against all loans.
In most cases, loans are a great option for financing a college education.
Problems do not stem from the loan themselves, but rather the recipient’s lack of control over his or her personal finances.
Making a personal financial statement is a huge step in achieving financial independence and avoiding the debt trap. It forces you to regularly read and analyze your debt to income ratio and cash flow.
It doesn’t matter whether you are $1,000 in debt or $150,000 in debt — what matters is that you have taken initiative to learn the terms of your financial situation.
Unfortunately, a personal finance course is not required throughout our education, but the sooner you can become an informed skeptic of personal finance, the sooner you will achieve financial freedom.
Jessica Shorland is a senior peace, war and defence major from Gloucester, V.A. Contact Jessica at email@example.com.