Thought #5: 3 Ways to Manage Student Loan Debt

Since “Harlem” by Langston Hughes recently found its way back into my life, I have been thinking a lot about the idea of a dream deferred in the context of my situation with student loan debt.

Hughes starts the poem with two poignant questions, “What happens to a dream deferred? Does it dry up like a raisin in the sun?”

Exiting high school, my dream was pretty simple: a career that garnered the respect of my family and peers and financial freedom. Every adult in my life at the time insisted that a college degree would place me on the fast-track to my ideal life and pay for itself. Obviously, I borrowed the money I needed and enrolled in the highest ranked university that was willing to take me.

As soon as I signed that initial promissory note, I was locked in the cycle of borrowing just to defer repayment – it was actually avoiding repayment that motivated me to continue directly on to Grad School because entry-level positions barely paid enough to cover the cost of living in the Bay Area, yet alone my student loan payments.

All these years later, I still believe that my degree was a smart investment; however, at the age of 18 years old, I had no clue how much borrowing would actually cost me later on down the line in terms of opportunity and quality of life. Lately, all I can do is worry about what’s going to happen to my dream as the reality sinks in more everyday that it could take me the rest of my young adult life settle my debt and finally start to live the life I dreamed of as a kid.

For Thought #5,  I want to share 3 debt management strategies that will hopefully help you to better manage your student loan debt so it doesn’t spiral out of control and threaten to defer your dream.

#1. Manage the Cost

A mistake that I made early on was that I didn’t put a price on my education. Obtaining a degree by any means necessary was my mindset, so I borrowed – perhaps even a little more liberally than I should have. I could have benefited from a budget.

As a college adviser in high schools, I would ask students if they had a budget for their education once the financial aid packages started to roll in. While a few students were financially conscious, an overwhelming majority of students were clueless like me at that age. This simple question, however, sparked some really productive conversations about expectations for life after college.

I believe that a lot of people invest in college expecting increased future career earnings; however, I wonder how many people actually consider how much it will cost to live and repay a loan after graduating. Free online tools like Nerd Wallet’s Student Loan Calculator or Career Zone’s Make Money Choices are great resources to estimate the cost of a loan and your desired lifestyle – the hope is that realistic statistics will empower you to make more informed decisions about borrowing.

More than paying to attend a name brand college, grit and resourcefulness (e.g. applying for scholarships to offset the amount borrowed) are the characteristics that are going to help you rise to the top. Carefully consider your options and your goals before taking out a loan.

#2. Get Informed

Taking out small loans each semester over the course of four or more years really adds up, so much so that I was shocked when I finally got informed about how much I owed. My debt grew beyond control because I wasn’t keeping good track of how much money I was borrowing – all I knew for sure was that I wouldn’t have to deal with my debt until six months after graduation.

In hindsight (see previous Thought, “Is Hindsight 20/20?“), I didn’t really want to know exactly how much I owed – my debt scared me. By not keeping a closer eye on the amount of debt that I was accruing, I ended up hurting my financial health in the long run. Had I monitored how my debt was growing over time, I like to believe that I would have made some different decisions.

Even though they heavily market credit cards and other credit-based products, Credit Karma  is a credit tracking tool that I could have benefited a lot from early. Credit Karma generates your credit score and report information for free, allowing you to keep track of what’s going on with your credit at all times.

When it comes to managing your student loan debt, knowledge is power. If you work with someone to develop a budget and monitor your debt, you will be empowered to control your borrowing so that it never has an opportunity to get out of hand.

#3. Pay the Interest

The whole time I have been accumulating astronomical amounts of debt, I have also been working; however, I didn’t contribute any of my income to managing of my debt.

I spent all my income trying to “Keep up with the Joneses” – I took advantage of the deferment on my student loans to buy a lifestyle that I actually couldn’t afford, which I am paying for today in the form of tens of thousands of dollars in compound interest.

The thing about unpaid interest is that it gets added to the principle (i.e. the original loan amount). Basically, you end up paying interest on any unpaid interest you accrue. This means that your principle can look dramatically different by the time you graduate if you aren’t proactive about keeping the cost down.

Instead of eating out, purchasing new clothes and the latest gadget, or attending popular concerts and sporting events, pay the interest on your student loans if you can afford to. Besides, interest payments are tax deductible, which means a larger return come tax season.

Borrowing to pay for college isn’t a bad – just be smart. Crunch the numbers and proactively manage your debt so paying it off doesn’t impede on your quality of life and/or threaten to defer your dream.

Enjoy this “Thought”? Be sure to like and leave me a comment. I’d love to hear your thoughts. Also, please subscribe to this blog on my website and get automatically notified of new posts.


Thought #4: 4 Ways You’re Rich

Recently, my father decided to go back to school, so he enrolled in a night course with me,  which means we’ve been spending more time together then we have in years.

You’re probably thinking that all of this quality father/son time is adorable, but the reality is that the two of us rarely ever see eye to eye – introduce a classroom to our dynamic, and we become arch nemeses.

Our conflict stems from the fact that he perceives my views as liberal and generally naive, while I think he is conservative and a little out of touch.

A couple of weeks ago in class, we were on opposing sides of an issue like we normally are; however, this time my father seized an opportunity to make things personal and hit me where he knew I would feel it.

The topic we were discussing that evening was: “What motivates employees?” A group, including my father, agreed that money was the greatest motivating force in the workplace, yet the professor presented research suggesting that other factors, such as challenging work, a clear connection to future goals and aspirations, and positive relationships with coworkers and managers motivated employees to be more productive and approach their jobs with more enthusiasm.

Inspired, I shared how I prioritized finding work that I considered to be meaningful over jobs that offered high salaries during my recent job hunt, to which my father rebutted: “He mightn’t had taken that Community College job if he wasn’t living with me rent free!”

It’s true, my father has always been my hero every time I have gone through a major life transition (e.g. this time, my plan to move abroad fell through, and I found myself between jobs and out of an apartment, so I decided to take a risk and launch a business). Still, I couldn’t pick my jaw up off the ground – my father got me good.

After some reflection  – and major ego restoration – I came to see that my father was actually trying to remind me that I’ve been able to pursue my dreams because I possess a lot of Capital.

For this “Thought”, I discuss 4 ways to be rich and make progress towards your dreams even when your bank statements say you’re broke.

#1. Appraise Social Capital

Social capital refers to the value created by the people in our lives. Family, friends and our professional associates are all valuable assets, particularly when making a major life transition.

While the delivery of his message could have been more tactful, my father was unequivocally just in his assertion that I might have prioritized a large salary in my recent job hunt had I not been the beneficiary of the security and support that he provided me.

Receiving help from a parent to make a down payment on a house, getting recommended for a position by an associate in a coveted company, or crashing on a friends couch in a time of need are just a few examples of how each of us has probably benefited from social capital; in addition, the belonging and sense of connection created through our social networks is extremely valuable.

Though social capital varies greatly from person to person, I’d like to believe that if each of us appraised our social networks, we’d realize just how wealthy we are.

When you’re broke and chasing a dream, it’s important to cultivate your social capital. For example, stay present in the lives of the people you care about and continue to expand your network. Also, don’t be afraid to humble yourself and tap into your social capital – you might be surprised how willing and able people are to provide you with what you need to keep pushing forward.

#2. Expand Human Capital

Human capital refers to our intrinsic talents, skills and abilities. Besides who you know, the return on investment in what you know can’t be underestimated, especially when you’re trying to bring a dream to fruition.

Thanks to the internet and the public library, expanding your repertoire of talents, skills and abilities has never been easier – or cheaper! You can learn almost anything online or in a book. Moreover, your local community college is a great resource for Career and Technical Education, which provides direct access to many of the most popular and fastest growing careers (check out my post “5 Reasons to Get a Certificate” for more information).

Just because you’re broke doesn’t mean that you can’t become an expert on a topic or in an area of interest to you, or you can’t pick up a some new skills that could come in handy later on down the line when you’re trying to launch that business or apply for that dream job.

#3. Diversify Economic Capital

Economic capital is the capital we’re most familiar with – and probably the type of capital we’d like to get better acquainted with – and it refers to cold hard cash.

While human and social capital are important, “money makes the world go round“.

It cost money to interview or start a business, and that’s on top of eating, keeping up with a phone bill and car insurance, or student loan payments (if you are one of the millions of Americans grappling with student loan debt), so I would be remiss if I didn’t emphasize the importance of diversifying your economic capital.

When you’re transitioning between careers or starting a business, you probably don’t really want to commit to a 30+ hour per week job; however, that doesn’t mean you can’t still make money.

If you live in a major metropolitan area and have a car, contract with car sharing or delivery service and take advantage of the flexible schedule. It’s becoming increasingly popular to sell things online. If you have a talent or skill, chances are there is someone willing to pay you for them. In short, hustle!

#4. Cultivate Spiritual Capital

One of the first things to be sacrificed when life gets tough is health and faith. Spiritual capital is an original concept that I am using to represent the value in attending to the body and soul.

Exercising and praying and/or meditating are free, but they are two activities that can reap major benefits in your life. Hitting local trails or walking around your neighborhood is a great opportunity to reflect and strengthen your body. Moreover, having faith that a force greater than yourself is working out the things that are beyond your control is a great way to lighten your load and free  up your mind so you can focus more on the things within your control.

Accomplishing a dream can be a long and arduous journey full of trials and tribulations, which is why it’s so important to focus on creating value in all aspects of your life.

Enjoy this “Thought”? Remember to like and leave a comment. I’d love to hear your thoughts. Also, please subscribe to my blog on my website and get notified of new posts.

Thought #3: 5 Reasons to Get Certified

After finally convincing myself to be courageous and venture out on my own to start working as an independent educational consultant, I knew that I was going to need a lot of help figuring out how to start and operate a successful business.

Immediately, I began to research blogs, videos, and books that would give me the information that I needed to get started. While the internet provided me with more than enough resources, I mainly felt overwhelmed; it was hard figuring out how to organize and use all the information.

My gut told me that I would benefit so much more from working with an experienced entrepreneur or business professional who could curate the information for me and help me to break down the complicated process of starting and operating a small business into some actionable steps.

Fortunately, I had been researching and advising young people on alternatives to enrolling in traditional undergraduate programs for a while, so I was familiar with the various career-focused certificate programs offered in the Bay Area, and I remembered that the City College of San Francisco offered a free, 72-hour certificate program for persons interested in owning and operating small businesses, so I gave it a try.

As I prepare to complete the program, I appreciate just how much I have been able to accomplish in such a short period of time: I developed a business plan, I built a website and started this blog, I registered my business with my county Clerk Recorder, and I extended my professional and personal networks and now have mentors to support my continued growth and development as an entrepreneur.

In addition to the small business certificate program, I have earned other certificates, and each one has been similarly useful in helping me to cultivate new skills and open doors to new opportunities, so I wanted to take some time and share a couple of reasons why I think you should consider acquiring a certificate too.

1. They are Highly Specialized

One of the main deterrents of young people continuing their education after high school is the thought of more general education. I have heard on numerous occasions how young people are jaded by twelve years of compulsory education and lack the desire to take more courses on topics that lack a direct application in the world of work.

Moreover, some of my close friends have realized that the jobs they really want require highly specialized skill sets and know-how that weren’t offered in their undergraduate programs.

For both situations, a certificate is a great solution. A major benefit of certificates is that they offer a high degree of specialization, which means you only take those courses that are directly related to your chosen discipline, and many programs don’t require high GPAs, test scores, or prerequisite courses to start.

2. They Don’t Take Long to Complete

“I don’t want to be in school forever…I want to get a job,” or, “I am too busy and don’t have time to take classes,” are the most common reasons people give me for choosing to discontinue their formal education.

What’s so wonderful about certificates is they are created to provide a fast-track into a desired career, and many certificates are designed to fit the schedules of working professionals and non-traditional students. Many of the certificates that I have looked into take less than a year to complete (and some take less than 6 months!), plus many of the programs are offered in the evening or online making them compatible with virtually any schedule.

3. They are Affordable

It’s no secret that school can get expensive, and student loan debt is arguably the defining financial crisis of our times; however, that shouldn’t deter you from looking into earning a certificate.

While the cost of a certificate can vary depending on where you get it and you want to pay close attention to the accreditation and reputation of a program, chances are there is a certificate available at the right price for you.

If you are currently working, it might be worth it contact your Human Resource Department or speak with your manager/supervisor to find out if your company has any money set aside for professional development because you might be able to earn a job-related certification for free.

If you are not working, check out the course catalog at your local community college and see what the school has to offer. Community college programs are generally industry approved, and they offer some of the most affordable rates on the market – my program was free!

4. You Meet New People

Unless your chosen program is entirely online, you are going to get to work with lots of new people. These people will come in the forms of professors, experts, and peers – as you may already be aware, sometimes who you know is just as important as what you know.

Increasing your network is powerful because the more people you meaningfully connect with in your field means more potential opportunity. As you begin the process of looking for jobs, knowing people in your field becomes an advantage and can translate into higher quality recommendations and referrals.

In addition to expanding your network, new people have the potential to inspire creativity because you are exposing yourself to new and different ways of thinking. This exposure will help you to stretch yourself and become a more critical thinker.

5.  You Build Your Resume

Lastly, certificates are a great way to build up your resume and transform yourself into a more marketable candidate for employment.

Whether you are fresh out of high school and just embarking on your career journey, or you are a seasoned professional, certificates are a great way to spruce up your resume and demonstrate to a potential employer that you are intellectually dexterous and committed to learning and growing professionally.

Certificates offer a big bang for the buck! A short investment in time and finances can turn out to produce big returns in work satisfaction and future earnings.

Enjoy this “Thought”? Remember to like and leave a comment. I’d love to hear your thoughts. Also, please subscribe to my blog on my website and get notified of new posts.