Once again I need to focus my eyes on Credit.com, and specifically at Christine DiGangi and her article “13 Thing People with No Student Loan Debt Will Never Understand“. Let’s set aside the fact that the article should’ve likely been titled people “who have never had student loan debt” and instead get into these points that make me wonder if the author has ever had student loan debt. Seriously, she’s got some doozies here.
- There’s that falling-off-a-cliff feeling you get when letters start rolling in after you’ve left school, telling you it’s time to pay up.
And given that you have 6 months from the day you leave college before first payment is due, and that is mentioned in every disclosure you’re given about your loans (you did read those, right?), the letters informing you of your upcoming due date and, more importantly, the payment amount should not be a surprise. If they are, then you weren’t paying attention.
In those letters will also be instructions about getting deferments or a forbearance, so make sure to read them to understand the process. And call the customer service numbers if you have questions about those processes or need to initiate them.
- You quickly realize your disposable income is also going to fall off a cliff.
And again, given you have six months from the day you leave college before the first payment is due, that should be enough time to anticipate this expense and all other expenses you might have so you can create a budget.
- Then there’s the confusion of dealing with a loan servicer whose name you don’t recognize, because you borrowed money from the Department of Education.
This is provided you need to actually call in and discuss your standing with the loan servicer. With the small loan I had through the Department of Education (the bulk of my student loans were funded by Wells Fargo via the Stafford Loan program), I never had to call in.
- Once you log in to set up your account, you see your loan balance and think, “Holy crap, that’s way more than I borrowed.” Interest is a soul-crushing beast.
The only reason to be thinking that is if you ignored all the statements the loan servicer was sending you during the time the loan was in deferment. If you weren’t paying attention to that, you have only yourself to blame.
- You stress out every month about your payment arriving on time, even though you set up automatic payments.
If you set up automatic payments, you don’t need to stress about your payment arriving on time. If you set up automatic payments, the loan servicer isn’t going to hit you with any fees or penalties simply because their system didn’t initiate payment in time for the due date. That’s their fault, not yours. And if they do hit you with a fee, call in and tell them you have automatic payments set up — something they can easily confirm — and they should remove it.
- But when the payment goes through, you’re pissed because you just gave away another couple hundred dollars you could have saved for a down payment on a house, or to replace your run-down car, or for that emergency fund you know you need, or to take a vacation or a million other things you don’t have the money for.
And of course we can’t fault Credit.com for mentioning the fact you could’ve used that payment on other kinds of debt. Ugh… Seriously when my debt payments were going through, I wasn’t thinking about what that money could’ve been spent on. I knew I had obligations to pay, so I had to think about paying those obligations, not where the money could’ve gone had I not had those obligations.
- And if the payment gets screwed up, you get to frantically make phone calls to try and fix the problem, get late fees waived and hope a late payment doesn’t end up on your credit report.
If you screwed up the payment details, you have only yourself to blame. Seriously, how difficult is it to double-check the information you entered before saving it? Their systems won’t initiate payment against a bank account number you don’t provide them. So if you gave them the wrong information, or fail to update that information if you move your account to a different bank, you have only yourself to blame.
- There’s the sad familiarity you have with your student loan servicer’s phone number, because you’ve probably saved it in your phone so you know who’s calling you incessantly about paying your bills.
This should only be happening if you are habitually late or not making the payments at all. If you’re unable to pay your loans, you need to seriously reevaluate your standing and discuss that standing with the servicer. At the same time, if you’ve already gotten a deferment or forbearance, they’ll want you to provide periodic updates on your standing to them, and will call to obtain those updates. After all, you owe them money, and likely a significant chunk at that, so they’re not going to just go away.
- And even if you’ve been making payments for years, you feel like exploding at the sight of your account balance — because that pesky interest and decades-long repayment plan seems to keep you from making any progress toward getting out of debt.
And it’s your fault for borrowing so much. If you don’t want the hassle of paying it back, don’t borrow it to begin with. But since you’ve already borrowed and spent the money, welcome to the flip-side of the coin. I took about 10 years paying off over 14,000 USD in student loan debt. Thankfully being in the Stafford program meant I had a low interest rate, so the payments were easy.
But that wasn’t always the case, as I was unemployed for a long period at one point and had to play catch-up on those loans. Wells Fargo even offered a forebearance, which I turned down since I had a plan for catching the loans up — which required making about 1500 USD in payments in two months time with debt collectors breathing down my neck.
- But you keep paying anyway, because it seems like there’s no way out of repaying your student loans, even if the rest of your financial life collapses around you.
You keep paying anyway because you have an obligation to do so! And if the “rest of your financial life collapses around you”, then reevaluate your financial life to get things in order.
- Then, after you’ve gotten used to sending your payments to one place, your loans are transferred to another company and you have to set up everything all over again.
Yes, banks and loan providers will sell off loans in order to recover as much of the principal as they can up front rather than waiting for it to come in over the course of years, perhaps decades. And they typically take on a loss doing that. My student loans originated through Wells Fargo, then were sold to ACS Education Services, a division of Xerox Education Services. Right before I made the last payment on the loan, I got a letter saying they’d be transferred to another servicer. That’s just part of the business.
But how difficult is it to set up the payment information again? It isn’t hard. The only complication is having to retrieve the routing and account numbers for your bank account to make sure you enter them properly. Aside from that, you just enter the information into the online account and be done with it.
- Then there’s that moment each month when you’ve forgotten about how much you hate your student loans, only to get an email about when your next payment is due, or there’s a message you have to log in to read, or some other annoying bit of communication that’s probably meant to be helpful but you’re certain it exists solely to torture you.
That e-mail reminding you of your payment is also called your statement notification. And they’ll also send you e-mails whenever there’s a privacy policy update, among other notifications they may periodically send. You can opt out of much of that if you wish, or have them send paper copies in the mail. If you have automatic payments set up and don’t want the periodic e-mail reminders, you may be able to opt out of them. Instructions will likely be in the e-mail. But even then they’ll likely still send you an e-mail telling you they’ve initiated payment.
- And, eventually, there’s the ridiculous joy you feel when you make your last payment and you’re finally free of student loan debt.
I wouldn’t call it “ridiculous” to feel joy at paying off an account that’d been sapping your income for years on end. I remember paying off all of my other loans — student loans, my car, a personal loan. It was great watching those payments disappear from my budget so that money could be re-allocated, after having a little celebration. But there’s nothing “ridiculous” about that joy either.
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I’ve gotten on Credit.com’s case before with regard to the tripe they publish. It’s all marketing materials. So naturally they’re going to over-inflate and exaggerate a lot of what they say simply because they can. At the same time, the fact they’re misleading people cannot be ignored.
Here’s the thing: there’s nothing special about student loans. It’s debt. These points could still apply whether you’re talking about a car loan, personal loan, or student loan. So why she chose to make these things people without student loan debt will “never” understand is beyond me, and it’s extremely misleading.
