Lessons Learned from Student Loans

Can anything good come from college loans?

The short answer: not really. The deeper answer: It depends. Some educations end up giving boons, while some debts only grow deeper. 
 However, I’ve decided to take those lemons, sort ‘em out, and sell them to the Coca Cola Corporation for that lemony zest flavor in Sprite. 

In other words, here are some lessons that I’ve learned, and am still learning, thanks (and no thanks) to my student loans. 

#LifeLessons #ItsAHardKnockLife #StudentDebt #StudentLoans

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Hello and welcome to the Thinking Ahead Podcast. My name is Rinaldo Stephens and I'm your host on this journey to find out more and discover the truth about careers, college and finance. Most of us have embarrassing stories from when we were younger. Some are more embarrassing than others and some of you have more stories than others. And we hope at some point that we'll have made it and that the embarrassment will stop and that will stop doing embarrassing things. Uh, well, some bad news, the embarrassment don't stop. And that's because making mistakes doesn't stop. Some would say that that's one of the key points of being human. However, we can learn from our mistakes and teach others to avoid those pitfalls. We're better than any A.A.I. in that case. And really, learning from your mistakes is the most human thing you can do. My student alone story is embarrassing to me at least, but probably more common than I originally thought. So I'd like to share it with you, along with some of the lessons that I learned along the way. And after the fact. During my junior and senior high school years, I was applying and looking for colleges. I was so caught up on where to go that I wasn't thinking about the how to pay for it. Being a smart kid in school, I had a lot of people saying, with your GPA and extracurriculars, I'm sure you'll get some scholarships or a full ride. But they didn't proceed to tell me how to get the scholarships or a full ride. So I applied for a few, largely thanks to the heavy prompting of my mother. But I guess a part of me thought that they would magically appear when I arrived at the school for orientation. Dumb? Yes. But I was 18 and I was in charge of my own financial situation. So I just didn't have the experience to know what to do or enough curiosity to seek out more answers. So when I arrived, I went to orientation, registered for classes, sat through some over-enthusiastic, sophomores and juniors talking about clubs and other things. And then the last stop of my tour was the financial aid and payment office. So my father was the one who went with me to drop me off to college. And I walked up to the financial aid officer or the financial payments lady and I'm sure she had a very long day or very long two hours because you know, a lot of students registering. And she said, okay, you've registered for a 15-hour semester. So the amount you owe on tuition is $10,000 or something to that ilk. The number may have been bigger. My dad and I looked at each other and I had a panicked look on my face, naturally. He was slightly more, I'll call it perturbed, judging from his face. And silence hung in the air for a moment. She noticed the looks on our faces and said, give me just a minute. And she went to the back to talk to I'm assuming talk to some people. My dad and I had a quick exchange conversation about how that was quite a bit of money and what to do if it wasn't covered. A conversation we should have had months before, but again, I was in charge of my own financial situation and my parents did give me a lot of freedom in securing in college and deciding where to go to college and all of that. A moment later, she came back and found a scholarship for minorities that brought my cost down to about $5,000, which is still a lot to borrow, but not nearly as devastating. So to cover the rest of tuition, I had to, you guess it, get a student loan. Most of the process is a blur, probably because how many sheets of paperwork there were. And there were just really spots that you go through and sign here, sign here, understand this, this is a note, blah, blah, blah, blah. But at the time, people were borrowing directly from banks and lenders with government backing. So I chose Wells Fargo, since it was a bank that I had heard of, and the rest of the paperwork just went super quick. So I signed the promissory note, read like 20 pages or probably more of contracts, and then next thing I know I was done school was paid for for that moment and semester. In the heat of the moment, I was just glad to be out of that office and have college quote unquote paid for, but there was so much that I still did not understand and wouldn't come to understand for some time. As I said, there are a few lessons in this. And the first one is nobody is going to just give you information. You know in some video games how you're the main character and someone just walks up to you and says, "You there, you'll see him trust while they hails the MacGuffin that will change the course of the world. Ah fate is in your hands." Shout out to oblivion. But yeah, real life doesn't really happen like that. In other words, you have to actually go out and seek the MacGuffin or the information that you need and want. Nobody went out of their way to tell me what getting student loans meant long term. They painted as "student loans all the way for you to afford a well-deserved education." I guess I just went northwest, northeastern Connecticut. Student loans will feel like pitties in the bucket compared to the money you'll make in the future. But like most people in reality, they're only thinking of the norm. And what's good for them? Not necessarily what's best for you. And they definitely aren't thinking about creating a financial plan that won't include loans in the future. Do your research ahead of time? That is before you walk in the financial aid office and sign on the dotted line. Even though most forms are electric now. But again, look it up. Do your research. Continuing my story and bring it to my next point, the second lesson I learned is taking action sooner rather than later is usually better than waiting. At least in our fast-paced financial world. So in my case, I waited too long to ask questions about my loans and college payments. My first instance of this was when I was trying to get in-state tuition. And I kept falling just shy enough of the income requirements to become a Florida resident while enrolled. Missing the mark by only a few hundred dollars it felt like in one year and had I been more knowledgeable and pliable in the sense of self-income. I probably would have found some "freelance income" from somewhere and made the required income or claved in more tips. But after the third time this happened, I went in and complained to the residency office where a lady finally disclosed to me that I could have been claiming my student loans as income. What? You couldn't have disclosed that to me earlier? Now, that example should be taken as an instance where I should have brought up the question sooner and started asking more difficult questions despite how the other people would have felt. Waiting to ask about vital information or assuming the best outcome is a huge mistake in any venture, whether it's business, college or relationships. Sometimes us dreamers try to cover up the difficult questions under the guise of positive thinking, when really it's delusive hoping. Furthermore, I should have had those difficult "what if conversations with my parents and myself earlier?" What if I get accepted to this school? What if I can't pay for the tuition? What if I take a year off? Getting tough conversations sooner rather than later is often the difference between success and failure in the long term. Even if you don't get answers immediately, the pressure that builds from holding questions inside can overwhelm a person and cause them to make mistakes that they otherwise would not have made. Another instance where this worked against me is in seeing my Ombudsman, so at every college they have an Ombudsman who is a person that discusses the financial relationship between the student and the school. I did feel like I was overcharged on tuition because I could have had in-state tuition sooner. I meant to go to the Ombudsman and make a complaint about it. I had that tick in the back of my head for years and then I graduated and I still had it in the back of my head and it's just like, you know, I didn't do anything about it, so it's like, you know, I sometimes waiting, I guess that's another lesson hidden inside of this lesson. Sometimes waiting, quote unquote, "waiting" just becomes not doing anything about it. And that happens a lot. Some people are like, oh, let's wait. Let's wait and see. Let's wait and see what happens. Let's wait and see if we find a better deal. And sometimes it just turns into not doing anything. And as someone once told me not making a choice is making a choice. Not taking action is an action. So be sure to get yourself out there. In the case of the Ombudsman, I think I brought it up and she discouraged it. But by the time I had the courage to ask again and the fortitude to ask again, I was already graduated. So my point is this, ask questions early and act early. My third lesson from student loans or really from my college process is learn to trust yourself and the process of trial by fire. Really learn to trust yourself in the process of trial by fire, should be how I say that. Because it's really tough, especially for young adults and college aid students, to learn to trust themselves. Because we always want to be like, I'm grown, I'm an adult and I can do all this on my own. But deep down, or sometimes under that layer of toughness, we're like, please love me daddy cause I hate me. But it all depends on the situation in the person. But I think it's even tougher for people who have gone through most of their life with many successes and little to no failures. When you get into college and the rest of your life, the stakes feel higher and oftentimes they are higher, but they feel monumental compared to the stuff you used to worry about in middle school and high school of course. In one instance, I didn't trust myself to take a semester off during college. I scaled back, but I took classes. That was a mistake. I ended up getting a D in two of the three required classes I took, which for court classes is basically failing, so I would need to take them again. If I had just trusted myself to be myself instead of what I feared on becoming, which was a college dropout, then I would have had more money in the bank cause I didn't have to take the classes more time on my hands because I would have been able to work without having worry about homework and all that stuff. I would have had less stress because I wouldn't be in the midst of failing and running around and I would have had a better GPA. Sometimes we make decisions because we're afraid of making the same mistakes as others, but the truth is you're going to make mistakes anyway. Usually different kinds of mistakes than those that came before us. I'm not saying don't watch out for common pitfalls or don't be concerned about some areas that you may fall in, but what I am saying is don't let fear be the only guiding force in your decisions. Learn to trust yourself. Lesson number four, there's usually more than one way to do something. Use your imagination and make an actionable plan. From my junior year, I had come to depend on my loans, but even worse, I had scaled back my scholarship search due to the lack of success on my past attempts. I applied to the scholarships I knew I could get, but I never asked the financial aid office if there was a way to get back one of the ones I lost for my freshman year. I wasn't much for planning elaborate steps or methods back in my early college days, so I'd write goals but not really have a step or a weekly plan to get there. For example, I knew I should study everyday, but I never gave myself a concrete plan of studying for 15 to 30 minutes at 7pm or something like that. Instead what I would do, like most people, I would wait until the end of the week are the week before a test and go over the notes. This was terrible for two reasons, one, I bombed art history, and two, it gave me a false feeling that I was doing the necessary work when I really wasn't. If you actually have a plan, you can see how well you're doing along the way and if you need to re-coordinate yourself. I also would have had to plan to pay back my loans, but I didn't have a plan. I didn't have different ways of thinking about it. I did the classic goal without a plan. Many of us still do this today, you know, I'm going to lose some weight, I'm going to get fit, I'm going to make this business the best in the world. Those are goals, but they aren't plans and something that did help with this eventually when I learned it was the smart goals acronyms. I didn't understand smart goals through most of my college and some of my post-collegeers, but smart means specific, measurable, achievable, relevant, and time-bound. One thing that I do now, instead of saying achievable, I say, action-bound. What is the main action that will let you achieve the overlying goal? I rarely did this over time. Yeah, I could say I want to lose 20 pounds, so I look good in my wedding pictures by summer, which is specific, measurable, and all of the other stuff, but without a daily or weekly action to tie into the goal, it basically becomes void. So if paying back student loans, maybe I should say pay a minimum of $250 a month on my loan, even during the hard time, so I can pay it off our seek loan forgiveness in 15 years. That's much more specific, much more measurable, much more action-bound, and understandable, than saying pay loans off. Without actions, goals are no longer relevant. And again, back to the lesson, you can find different actions that will lead you to the same goal. You can copycat, but you can also get creative. You do have to use your imagination. Without actions, goals are no longer relevant, undoing the whole smart system. So you need specific numbers, specific measurable achievements, and specific actions. Rule number five. And again, these really aren't in any order because they can apply to any part of my lesson, but number five is the system is made to take advantage of those who don't know. Not to go against pink Floyd, but it turns out we do need an education, specifically about the financial systems that are used to keep everybody in bondage. That includes the upper middle class and higher, by the way. There are plenty of six figure households in debt, but aside from that point, something we should be aware of is that debt is really made to take advantage of those who don't know or don't care to know, especially obvious with this is credit cards. You'll notice how the deeper you get into credit cards, the smaller the print becomes and the more jargon they use credit card spam mills a perfect example of this. First, they show you the offer, then maybe maybe a paragraph of text on the front page, but the biggest and boldest numbers are the introductory rate and time frame. The next pages are a detailed breakdown of everything, but it's so much wording and so many paragraphs of text, why would you take the time to read it? It's also the most confusing and the most likely to be skipped because it's the actual terms of the agreement. So it is by design and student loans are very similar. Banks know how this game is played and that is where they hide some of the truths that are most important to you. They do it with credit cards and they do it with student loans. Can you think of any other business or any other financial institution that is willing to trust an 18 to 24 year old with a $50,000 loan when they don't have a job, they don't have sign of income and they're just going to do this thing that they won't see income from for a few years. Can you imagine if a car dealership did that, if car dealerships were giving out loans to people without jobs, we'd probably see a lot more Lamborghinis on the road, but we'd also be seeing those Lamborghinis being repossessed. My point is this, while schools are seeking to help you get through the program and get into the program, they don't really care about your payback and your loan because it's backed by either the government or a large bank. They get the money up front and the lender is the one that has to collect over the 10 years after you graduate or whenever you quit school. Once you sign the paperwork to pay for a college with a student loan, the school financial officers have done 90% of their job, which is securing funding. It is your job as a student or as a parent of a student to ensure you know what you're getting into. I do recommend that parents be part of the college selection process and, again, I said part. Some of you would rather decide the whole thing, but this is a good chance for your child to make some big decisions and learn how to make their own life decisions. I have other lessons that I learned from my whole college process and especially the fiasco with loans, but the last one I'm going to leave you with is this. We're terrible at predicting our own personal future. If you ask financial experts, crypto gurus, AI profits, crypto bros or actual religious profits, they believe they can tell you where our society is headed and you know, sometimes the writing is on the wall. However, very few, if any, can tell you where a person is headed directly. Usually, they look at past decisions and will determine what a person will do based on what they have done. However, when we look at ourselves, we tend to ignore past outcomes and think more positively about our future outlooks. We tell ourselves, "Yeah, that was then, but this is now. I'll have a better outcome now." All while doing the exact same thing. While it's all good to believe in yourself, it comes down to what you are doing that will determine if the future is going to look any different. And I'm talking to person number one here myself. I've made past mistakes and old habits do die hard. It's important for everyone to check on what their habits are unless they fall into the same mistakes again. And checking in is hard. You may tell yourself, "I'll never do that again," or, "This is the last time." But unless you know the triggers that cause the behavior to happen or the environment or the people, you won't break away. Let me put this another way. Our brains are lazy. It wants to figure out the quickest way to get something and the brain uses past success as a method of training itself. So if you get a spark of joy from buying something, then you may find yourself making unnecessary purchases just because it makes you feel good in the moment, not because you need it. Or as a college student, you may find yourself getting caught up in something complicated that you don't understand, like a lease or credit card, simply because you have habitually had mom and dad or some other guardian or person there to save you or to give you advice on it. The problem is that as you get older, it's not their job to save you. There is no Superman. There is only you. Maybe the incredible Hulk, but they usually just reckons. And small habits carry over into big ones. As they say in the army, you don't rise up to the challenge. You fall back on your training. So do you want to have a better life, make better decisions? Here are some tips of training that could help you defeat the habits that have held you down, avoid debt and hopefully live a better life. Training exercise number one. Learn to say no frequently and often. One of the reasons college students and people of all ages get into situations or problems so easily is that they are afraid to say no. Even when we decline something, we are told to make it soft. No thanks, not at this time, maybe later. When we really want to say, if you ask me that question again, I will spray beef jerky cologne on you and release the rabbit hounds. Saying no is one of the simple and most powerful ways to keep your life together. And not just saying no to others, but saying no to yourself. No, I can't get that new pair of shoes this week. No, I can't marathon season one and two of the tick. No, I can't buy that fourth cat. That fifth cat would be one too many. You don't have to live a stoic, cloistered life, but saying no to things you want but don't need, or more likely can't afford, is an important life skill. Also, learn to say no to people at work. It helps out and builds your confidence in saying no. Training exercise number two, track yourself. This seems simple enough until you try it. It turns out that manually tracking your intake or output or habits is something that since we don't put a lot of thought into it can feel burdensome. However, the insights that you can get after you track is how you can see what your habits are and even figure out what the triggers are. For example, in some anti-smoking programs, in the first weeks they don't even tell you to smoke less. They just ask you to track when you're smoking and what you are doing before you started smoking. I had an acquaintance do this and it turns out she smoked more when she was driving places so that what had once been an after work stress relief had transformed into smoking a pack on days when she was just running errands. The most common topics to track are specific habits, aka smoking and drinking, spending, down every transaction that affects your wallet or credit card, and time. For tracking time, there are several ways to do it. One way is to track by activity, so when you switch activities you write down how long you spent on the one you just finished. But my preferred method is to get a small notebook, pre-grid it with 17 rows down and four columns across. Each row is an hour, making each column 15 minutes. Whenever you task switch, you will fill in the appropriate columns with the dominant task. I prefer this method because it more easily tracks the time lost on goofy crap like Facebook or Imager or even toilet Twitter time, which is leveling called "Schwitter" by some. Training Exercise #3 Teaching detailed plans and sticking to them. Most of you, if not all of you, have made plans, even detailed plans. But maybe you haven't stuck with them. That's why we need to train. You've built a habit of not following written plans, and now you need to build the habit of following written plans. So here's what you do. Write down one goal for the day. Not a big goal, we're not trying to overthrow any governments here. Yet a small goal. Maybe even something you were going to do anyway. I recommend a menial task, something like clean the bathroom, vacuum the floor, shave my brother's head while he's sleeping. You know, mundane things. Now, with that goal in mind, I want you to break it down into steps. What materials do you need to gather? Is there preparation involved? Do you need to pick up items off the floor beforehand? Do you need to suggest that your brother takes a binadryl for his allergies to make him more sleepy? Again, it's not that you don't know what to do. It's that you're training yourself to break down goals into visualized steps and writing them down. This is a brain training exercise. And yes, this will level up with you. So you start with small tasks, and eventually it can help you with world changing movements. This philosophy is explored in books that talk about cybernetics or reasoning models, such as self-discipline by Ray Clear. And it's further cemented by a semi-famous 1979 Harvard survey that found that 3% of students that set goals and had a plan to achieve those goals had much, much more success than the 84% that had not written goals at all. All right, my watch is telling me that this is all the time we have on today's episode. Thank you for tuning in, and if you've found any of this advice helpful, please leave a comment, drop a note, drop an email, subscribe or share this podcast with a friend. Until next time, do the daily work, train your mind, and of course, keep thinking ahead. Because without the action, the goal is no longer relevant, which undoes, undoes, undoes, which means the smart system is no longer a specific, it's no longer working. Wow, I need to redo that line.