Loan is a Four-Letter Word
In this article, I decided to try something different. Rather than simply read about various things I’ve learned or picked up throughout my college days, I decided to directly interview various students and alumni who have had experience with the struggles during and after college. My goal is to provide more insight into academic life and beyond while allowing you to get an idea of what’s to come. Why grind away and make mistakes when you could save yourself the hassle by learning from someone that has already taken the leap?
With that being said, I hope you enjoy this first article based on an interview I had with Pennsylvania State University Alumni: Ramon Morales. Currently, Ramon is an aerospace engineer at Iridium Satellite Communications.
So, what did we talk about?
Well, we discussed one of the most frightening and terrifying things that any student and adult could possibly hear: LOANS. That’s right! We disdainfully discussed the four-letter word that many of you will eventually become accustomed to (if you aren’t already fairly familiar with it). Beyond that, we also examined the concepts of a networking and GPA in order to figure out which was more important between the two.
Now, as far as loans go, Ramon suggested tackling loans effectively and immediately. If possible, start chipping away at your loans while you’re still in college. That might mean one less shot of fireball or perhaps one less natty light (the best beer ever, I know) but you’ll be thankful in the long run. To elaborate: the total amount you pay in loans builds up and causes the interest rate to go up as a result. This means that each year, you’ll be required to pay more and more money. Your interest will compound consistently as a result. Just put that into perspective. Now, I’m sure you’d like to keep every cent you earn in the future, right? Yeah, I thought so.
Is it a little confusing?
Sorry to say, but that’s the point.
The purpose of loans is for the loaner to ultimately make back more than what you gave them. And honestly, the less you understand about loans, the more you’ll have to pay in the long run. Hence, the confusing concept and jargon. And the more you have to pay, the longer you’ll be in debt and unable to buy all of the good stuff you want. It’s an ongoing snowball effect that could really be problematic for you if you don’t take the time to handle it as soon as you can.
Alas, there’s some relief!
Ramon was kind enough to provide insight on methods that he’s learned about and have worked for him.
First, you need to consider the following question: Federal or Private Loans—which comes first?
The answer: Pay those Private Loans first!
The reason is because Private loans tend to have higher interest rates when compared to federal. Also, Federal loans can offer forgiveness programs that you can apply to if you make consistent, on-time payments. Meanwhile, the same can’t be said about Private loans. Remember the aforementioned snowball effect. Well, private loans can start off as an avalanche plummeting straight for you, picking up momentum as it traverses downhill. PAY OFF YOUR PRIVATE LOANS FIRST!
Another tactic mentioned by Ramon is refinancing with another company. Using this method, another company can basically pay back your loans for you and charge you interest at a lower rate (compared to the initial loaner).
Yeah, it’s still a little confusing but hang in there. Loans weren’t meant to be fun. If you need help, just remember these three important tips:
Try to eliminate debt as soon as naturally possible. It’ll make you happy
It never hurts to pay money towards loans when you can
Always pay loans with highest interest rates first
So now, you may be asking: well, what if I don’t have a job immediately after college? How long until I’m expected to pay loans?
While it can vary a bit, you typically have a grace period of about six or so months after you graduate before you’re expected to start paying off your loans. Now, if this doesn’t seem like enough time to get a job and await the welcomed arrival of the loan collectors (it’s barely any time) you can always attempt to receive a forbearance, which essentially allows you to place a stop on your loan payments.
HOWEVER, your overall balance will still increase since you’re not actively paying off the loans. The forbearance just allows you to get a little bit more time while the loan collectors are forced to wait on standby.
So, now, the question is: how do you get some cash flow going to pay off these loans?
Ramon recommends aggressively applying to jobs immediately after college if you haven’t already started. Also, try to find a job that allows for basic support. Remember….the loans are coming!
Another efficient method of finding a job. Networking. If you’re reading this and you haven’t started networking, get to it (although feel free to finish reading this article first)!
Also, if you have no clue what networking is, check out this article I wrote a while back: What is Networking
“Networking is probably the most important thing you can do in college” ~Ramon
The great thing about your position now (for those of you in college currently) is that there are so many free events and programs that allow you to network with so many people on a more casual level. You don’t have to begrudgingly search for otherwise rare events in your area. Everything’s around and available to you. And even if attending events isn’t your thing, you can still network organically by opening yourself up to classmates, other students, and professors more, as well as joining various clubs or organizations.
Now, if you’re super concerned about your GPA don’t be. Are you the kind of person that stresses out about a poor grade constantly? Do you lose sleep (literally) or fall into a panic attack at the sight of anything less than a B? If so, you really need to cut it out. For the most part, employers care much less about your grades and far more about what value you bring to the business or job. Focus on developing your skill set rather than boosting your GPA. You’ll end up stressing yourself out to the point of mental fatigue for no real gain. As stated by Ramon, in his experience, employers may use GPA to filter people in and out but it’s not necessarily a disqualifier. Basically, if your GPA is average, don’t worry. Focus on what’ll benefit you more.
Now, when you seek out your first job, don’t be picky. Your first job will likely not be your dream job. Just get your work done and focus on having fun and enjoying yourself overall. That’s what’s important. To paraphrase Ramon: “While you still need to maintain a level of responsibility, you shouldn’t pass up on opportunities to enjoy yourself. The moment you become unhappy you’ll begin to see your motivation dwindle. Suddenly, everything falls apart”.
Keep that in mind. It’s important to enjoy life and the process. Don’t let stress overwhelm you.
Hopefully, this article was helpful to you in some way. Please, I implore you, keep those loans on your mind and develop a strategy immediately about how to pay them back! It’s arguably one of the most important things to do in your adult life. Crippling debt can definitely stifle the overall quality of your life. If you liked to article, be sure to give Ramon a shout out:
Do you have any experience with loans? Have you already tried applying for jobs or internships? If you have any questions at all, do not hesitate to leave a comment here or shoot me a message at email@example.com. I’d love to hear from you! As usual, thanks for reading! And be sure to share this with anyone that might be able to get some use out of this!