Friday, November 16, 2007

You can't give away what you don't have

I'm trying to be a good human. I'm really trying to be nicer to people, volunteer my time, give notice to worthy causes, be less of wastoid, etc. I wrote last month about the things that inhibit me the most in my quest, but I left out the giant elephant in the room: money. I'm going to deviate from my normal blogging topics because money is an overarching theme in the lives of those who don't have it.

I don't have a lot of money. My boyfriend and I live in a very expensive city and almost 1/2 of our income goes directly to rent. We also have a combined $50k in student loan debt, of which I carry the majority. That's a lot.

Last year the bf consolidated his $20k student loan debt and chose a graduated repayment plan. Big mistake. Sure, his payments for the first 2 years are about $100 cheaper than they would be if he just chose a level repayment, but his payments are pretty much all interest, as in, he's making almost no dent in the principal balance. It kind of feels like treading water, he keeps paying, but the balance doesn't ever seem to go down.

Now on my end, I just consolidated my loans, something I really didn't want to do. I didn't want to stretch out the repayment term because I know that doing so adds thousands more in interest. Plus, the interest rates are astronomical right now! But I really didn't have a choice because I can't afford the monthly payments otherwise. So I consolidated at 6.75%, and now I'm stuck with it. Even though as the economy continues to tank, the rates will drop, but I won't be able to re-consolidate at a lower rate. This is one serious flaw with the Federal student loan system and it shackles so many college grads with unnecessary interest debt. Not cool!

In the end, I decided to go with Bank of America over Sallie Mae for my consolidation. I guess there was some change in the law (of course I'm fuzzy on the details, I'm only one of thousands being affected by it!) so that many lenders are no longer offering a 1% interest rate reduction after 36 consecutive on-time payments. B of A still offers this, along with .25% interest rate reduction for enrolling in direct deposit, both of which I'm going to take advantage to the fullest. And yet, I'll be 42 at the end of my loan term.

I know in the greater context of the world, my student loan debt isn't such an atrocity. However, shelling out $300+/month to pay for my admittedly mediocre state school education when I could be putting that to better use at the food kitchen or sponsoring some kid in Africa or sending presents to brighten my little sister's day, well it really kind of sucks. If there were ever a topic to get this generation off their keisters and write their representatives in Congress, this just might be it.

Here are some things I could do with $300/month instead of pay back this damn loan:
1) Donate a laptop.
2) Save for 3 or 4 months and get a damn couch.
3) Sponsor 12 poor kids.
4) Leave a HUGE tip the next time I get my nails done.
5) Save it, so my little sister won't have the same headaches later on.

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FutureLawyer said...

WHINE! WHINE! WHINE! I'm looking at $130,000 in debt. Believe me, you've got it easy.

Hops said...

You're right! I hope you're going into a particularly lucrative type of law.