[Anonymous]

Not 100% sure this topic is right for this forum – but let me lay it out.

As aspiring, or already CPAs, we are required to get an education. Many of us even have more than 4 years, whether due to career changes or state mandated minimum education requirements to become licensed. Based on this, as well as how expensive an education is nowadays, it is a good bet that most of you, like me, have a negative net worth due to a large amount of debt.

Although partly myth – but mostly true in my experience – accountants are conservative, goal-oriented and can be frugal when they set their minds to it.

So, how did, or do, you deal with your student loans?

I am around two years out of school with around student loan debt in the $30’s. I am on a long payment plan (I think it is 25 years – I should know this!) and have a minimum payment of around 240/month – although I pay closer to $400/month. I recently moved to a nicer area closer to where I work (much more expensive), and purchased a really nice La-Z-Boy couch and am thinking of getting a big screen TV. BUT, I’ve started to feel guilty. Am I being irresponsible? Should I be living more frugally and try to triple my payments?

If I was smart, I’d live in a less convenient area and with roommates (likely chopping my rent in half but also adding to my commute). I’d stop buying shit that I don’t need (my little tv that I bought when I was 14 still works great – only 1 trip a year out of town to see my family would suffice). If I were smart, I’d live super frugally for the next 10 years of my life and put any salary increases towards my loan balance. But then again, I want to live, am easily able to pay all of my bills and save a little each month, and tend to think of student loan debt as good debt (vs. credit card debt, which I pay off completely every month). So although I do feel a little guilty, I’m not convinced I’m doing things wrong. Am I?

I am also curious on how you managed your debt after college.

[Anonymous]

@Iron is right we all had a choice. So if you can't afford to pay for college then you shouldn't go. You should accept the lot you have been given in life and stay there. Granted you could work your way through and pay for it as you go and be done in ten years because, as @Iron says, the only reason you took out those loans is because you didn't look hard enough for those scholarships or put in enough hours. And to think none of these students ever thought to ask the restaurants they worked for in college to pay their tuition.

[nicole2035]

You need to live your life, and honestly that is the purpose of debt. So you can make a lifestyle change immediately, and pay it back later. 30k still isn't that bad, i know some people 80k+ in debt all to go to a standard state university

10-15 years is a long time, you shouldn't forgo living life and take on this stress of the debt. Yes, it can be a problem especially if you lose your job. My suggestion? have a savings set aside for just in case if you lose your job for a year. Other than that, live your life, that debt will be there for a while. Even if u pay it off rapidly, what's the max can u get to be gone without diving into funds for necessities? 7 years? Do you want to live hand to mouth for 7 years? all for what, ~30,000 dollars not including interest. 7 years of your life is not worth that, enjoy yourself, it's ok.

[Skynet]

I say it depends on the Loan Shark. If the Loan Shark is a nice guy then he won't break your knee caps. But if he is not, then you can always offer to do his taxes and book keeping to pay down the loan.

AUD - 90
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[Anonymous]

@bbrandenburg10: I disagree with your post for a couple of different reasons. I'll just break it down.

“@Iron is right we all had a choice. So if you can't afford to pay for college then you shouldn't go.”

I disagree – alot of students can't ‘afford' college before they graduate but then, once they graduate and get a good job, they can afford their payments. Yes I have debt in the 30's but I don't have a car or mortgage payment, can easily afford my minimum payment and make ALOT more than I ever would have if I didn't take out those loans and go to college. Student loans give students the chance, as long as they work hard and make educated choices (i.e. choose an employable major), to move up in life. I make a lot more than either of my parents – and if I didn't go to college, I'd be making much less.

“You should accept the lot you have been given in life and stay there.”

This sounds awfully class-based. Like only kids from rich households should go to college. I'm glad I didn't accept my ‘lot' in life.

“Granted you could work your way through and pay for it as you go and be done in ten years…”

Student loans are a risk. One that you don't know will pay off until you graduate and get that job that will let you make payments. This suggestion is uber conservative, but may be a good idea for students in low 'employability' majors or if they can get a flexible decent paying job in their field of study before graduating. Personally, if I did this, I'd still be in college and, therefore, losing out on my annual salary (which is higher than anything I'd be able to get before graduating), 401k match, and promotions.

“because, as @Iron says, the only reason you took out those loans is because you didn't look hard enough for those scholarships or put in enough hours.”

I think that saying that it is the only reason is very extreme and I don't agree with it at all. With that said, I did not apply for as many scholarships as I should have, so completely get what @Iron is saying.

“And to think none of these students ever thought to ask the restaurants they worked for in college to pay their tuition.”

Some workplaces have these types of programs. But, nowadays, most don't.

[Anonymous]

@Anonny I couldn't agree with you more!

[san4596]

Iron – Really? You must be very young, or not have a clue on how the lower end of middle class lives. In my situation, it was either take out a loan for a higher education or no education at all. I did have a $500 scholarship for Fall & Spring for books, but that also required me to continue playing my instrument in band. The fallacy here is your imagination that everyone has the same opportunity as you. I thought long and hard about my decision to take out loans for college, and the benefit outweighed the cost. Because of my decision, I will be able to pay for my children's college education so they will not have to stuggle like me growing up. I am also the only person in my family with a college eduction.

BB – Out of all the places I have worked from a 16 year old to now 33 year old, there has not been an employer that would help pay for a college education. The opportunities in my area are slim to none, and I made sure to look at every avenue for scholarships.

CPA EXAM: DONE!!!!
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[Anonymous]

@San I know what you mean. I have never had one that would pay for it either. The simple fact is that most middle to lower class students are working in jobs that won't pay tuition reimbursement because it doesn't benefit them to do so. Why would a restaurant pay reimbursement for a server's tuition. Once they get the degree they are leaving if they can. When I was in college I applied for every scholarship I qualified for and even a few I probably didn't, and getting them was hit or miss. If I had to wait on scholarships and grants to pay for my entire college education, I would still have years to go. For someone to say I chose my student debt is an insult. The choice was no choice at all. It would be like saying someone who fell into the ocean chose to swim. Of course he chose to swim, but would you really call that a choice?

[Iron_Victory]

@ San – I am not very young or very clueless, nice try though. I just have a different mentality about things. I don't come from a background where anything was given to me and it seems quite similar to yours.

AUD - (74),78
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[Anonymous]

I wouldn't be where I am right now without taking out student loans. I received NO non-loan financial aid because my parents “made too much” which was ridiculous. I had no choice – no loans would have meant no school. An no, that's not a “mentality” – it's a fact. I did work during school which paid for my living expenses and books/supplies. But to have a job where I made enough money to pay for my education, it would have meant sacrificing study time which since I was in school to learn, having time to focus on my education was more necessary than working more just to avoid student loans.

As for the question in the original post:

Once I was done with school I had loans from undergrad and my Masters program. The undergrad loans are from a special private loan program for Massachusetts students and the interest rate is really low (about 3%). I pay just above the minimum because I'm better off putting the money towards more expensive debt (my mortgage and car loan – although those are both pretty low as well). My federal student loans were at the old standard Sallie Mae rate of 6.85%, and I always made extra payments on those to pay them down faster.

When my husband and I were forced to sell stock due to independence rules when I was promoted to manager, we used it to pay off my Sallie Mae loans, leaving me with about half of what I started with in loans, and only the low interest rate loans are left. I still pay a little more than minimum, but with such a low interest rate there's not a lot of incentive to pay them off this early. Once I get closer to the end, I'll just pay them off with a few grand left rather than actually running them to zero.

[MintsRGood]

Student loans are an unfortunate cost of doing business today for most of us! Without those loans, I would not have been able to afford my undergrad+grad program and neither would my husband. It was either incur debt or not go to college which was not an option.

After finishing up my grad program in 2010, Mr. Mints & I made the decision to bite the bullet and become 100% debt free by 2013. Mr. Mints didn't have much left on his student loan but myself on the other hand was carrying some undergrad+100% of grad school debt equivalent to a midsize family sedan! I'm very proud to say that we accomplished that goal on 12/18/12 and have ZERO student loans or credit card debt!!!!

For that period of time we didn't take expensive vacations, make extravagant purchases, gave our older cars lots of TLC, rarely ate out, and put every dollar of bonuses, refunds, monetary gifts etc. towards ridding ourselves of debt. It wasn’t fun every month to pony up more towards the student loan than our mortgage payment (not kidding or exaggerating) while watching my pals live it up with extravagant trips and expensive purchases and fancy dinners/brunches BUT we made the best of it. Mr. Mints & I embraced it by learning to cook at home elaborate dinners and enjoy inexpensive wine at home, we would have “in house happy hour” on our patio, we enjoyed “free” activities like taking our dog to a large park near our home, outdoor events that our city hosted, etc. When we made the last payment, it felt like a weight was off our backs. I wouldn’t trade the feeling of being debt free for any flashy trip, new expensive handbag, or set of pricey golf clubs you could offer us!!!

Now that we’ve cleared off the debt, I don’t have to feel guilty or irresponsible about us driving new cars or taking a nice vacation when needed. We’ve continued to live similarly but more relaxed about vacations, dinners, etc. but are still saving significantly towards a new home for when the time comes for a Jr. Mint and we are also maxing out our 401ks and IRAs. If we were still limping along with the massive student loan debt problem, we would certainly not be able to save for a new house or fund our retirement the way we want to. It’s not very flashy or exciting to fund your 401k/IRA but it’s also not fun to be poor when you’re old either. Without incurring the student loans, neither one of us would be able to have the jobs we do that make all this possible. Again, student loans are a cost of doing business for most of us but you don’t have to deal with them forever.

I can’t strongly encourage you enough to get rid of those loans ASAP and move on with your financial future!!!!

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[koz124]

I'm very insulted with those who insinuate I and others had a choice to pay for education with loans. I applied for numerous scholarships when I was in high school…and all it amounted to was $1000. I even attended rowing camp at UW Madison, and I had NEVER rowed before, in attempt to get a scholarship. I worked at least 20 hours a week my freshman year while trying to finish 23 credits a semester (which consequently did not end well.) My parents made too much money for me to qualify for any type of assistance, and they also refused to cosign loans. I ended up having to take a year and half off from school because I ran out of money the first year. Then I made the decision to go back. A decision that meant accepting a 17.5% interest rate on student loans because I had nobody to help and a 19 year old's credit. I continued working a full time job and several part time jobs through my bachelors, masters, and subsequent coursework to achieve the necessary accounting credits. Now here I am. Glad I've done it, but neck deep in student loans (with much better interest rates obviously), but on track to pay them off in 10 years. Those of you judging other's in debt should seriously consider what other's have been through. I've lived out of my car, worked double shifts frequently when I was younger, and had many other tribulations. Yet I know there are those who have fought through much worse. I would never condemn them because they had student loan debt.

-I apologize for the lack of “flow” in my response. Anger tends to mangle my thoughts and writing ability.

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[megn]

I'm with k917. I chose to use my time during school to study instead of working 60 hours a week to pay for everything (hence my 4.0 GPA). Even though I have around $25k in student loan debt, I don't think it was the wrong choice. I had multiple firms fighting over me when I graduated (including a Big 4), and I make well above what many of my peers make. To each his own I guess.

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[Study Monk]

I think the arguments for and against student loans are both valid. I think what the student loans are used for is the most important determination. If a person is working in low end retail and is taking out student loans to get a degree in accounting then I would say it is a smart decision. If the person already has an accounting job and is getting a MSA then student loans is probably a bad idea(CPA provides more bang per buck). Its USUALLY a very bad idea to take out student loans for liberal arts degrees and degrees that are not technical in nature.

I think trying to work through your college education making less than $20,000 a year is more silly than taking out student loans. Why make $20,000 a year for ten years when you can potentially make $50,000 after 4 years? My guess is most of the people who are adamantly against student loans didn't live your typical “Pursuit of Happiness” lifestyle, but instead had their parents pay for their education. Or maybe they were a gifted athlete. Either way making general statements in life is a bad idea, since you are biased by your own experiences.

I personally am planning to transition into tax accounting and am currently taking out student loans for a MST. I am a 32 year old full-time student who was working in retail last year. My disposable income working full-time as an assistant manager would of allowed me to pay for one class a year at GGU. So should I have waited 10 years to finish the MST in a program that gives you 5 years to complete? If I get a job this upcoming tax season it will be a good investment. If I don't than it may be a bad investment. Many people are becoming successful quicker because of student loans and many people are not finding jobs despite their student loans. People who don't take risks usually don't reap very much reward in life.

I won't even get into the idea that taking out low interest mortgages, student loans, and car loans, allows more money for higher yield investments. Or the fact that higher education costs are rising at a rate that makes getting your education sooner rather than later better financially long term(people taking longer to pay for their own education pay the interest known as inflation).

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[jeff]

Drama NINJA won't let me respond to some of these posts.

… back to FAR book.

AUD - 79
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Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Study Monk]

I took out the Dave Ramsey comment. I didn't want to upload another apology video..

I spoke to an ancient wise man who sent me on a mushroom induced journey through an ancient forest to find the key to passing the CPA exam. A talking spider monkey told me to throw the last of my drinking water in the dirt to find what I was looking for. So I followed his instructions and the following message appeared in the soil:

"Do 5000 multiple choice questions for each section"

[Author]

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