A cautionary tale about student loan interest

I'm a little shy about posting the numeric details of Brandon's student loans.  For some reason I have no qualms about posting my weight for you all to see, but I'm afraid to tell you how much debt we have.  I guess I fully believe that the number on the scale is not a reflection of who I am, but I don't feel the same way about our debt number.  I mean, doesn't the fact that we have debt mean that we've failed at something?  And does telling you all how much we've paid off make me prideful?  I don't know.  

In this post I'm still not going to post the exact amounts.  I will, however, show you some graphs so you can get an idea of the amounts that I'm dealing with. It's a decision motivated more by internet safety concerns than embarrassment.  Posting all the details of our debt just doesn't seem smart. But I'd be happy to talk to you about it one on one.  So don't be afraid to ask for details.  

I wont tell you the exact amount of debt that we paid off, but it was a lot.  It was the most we've ever paid off so far.  About a third of it went to paying off the Honda, the rest was on the student loans.  That's pretty impressive - especially when you see the amount compared to other years. 

(BTW, I totally know that I should have written principal instead of principle,
 but I noticed the typo after I uploaded the chart, 
and I've already spent way too much time on this post.)

I was going to do a whole post about how awesome that is, and maybe even talk about our strategies for getting out of debt.   But then I realized that deep down I'm actually very frustrated about the whole thing.  Or at least part of the whole thing.  

Three-fifths of what we paid on the student loans went to student loan interest.  Interest!  Some of it was interest that accrued this year.  Some of it was interest that was capitalized in other years.  But either way it's still money that didn't actually pay for anything.  That's kind of depressing.

No one ever talks about the nitty gritty of paying off student loans.  They talk about it in broad terms, get the loans, go to school, graduate, get a job, and (hopefully) pay them off.

But hardly anyone talks about how it feels to be living under a large debt even after making payments for three years.  No one ever talks about how frustrating it can be to spend so much money on nothing.

Yes we have reduced our debt during the past three years.  But the amount seems so small.  Check out this graph.  This is how much we paid over the last 4.5 years since Brandon graduated.  It looks impressive right?

Well check out this graph.  This is what the total balance on the loans looks like over those same years.  Not so cool looking.

And it gets worst.  Check out what the loans have looked like since Brandon first took them out.  (A few words about these charts. I'm still working on getting exact end of year balances for the years that Brandon was in school so a lot of those numbers are simple extrapolations.  And for some reason all the data for 2013 disappeared off my chart and I didn't feel like tracking it down again before this post so that's just a guess too.)

Those loans ones in the green colors started out so small and innocent looking.  But they were unsubsidized loans which meant they accrued interest the WHOLE time Brandon was in school.  That's right.  They accrued interest for SIX years.

And then after Brandon graduated it's not like we were able to make payments on them right away. I had the twins and was no longer working. Without my income we had to put the loans into deferment/forbearance because we couldn't make payments.  And guess what - the loans still accrued interest.

Yes we were aware of what was going on - but not as aware as we should have been.

Sometimes I mentally kick myself for letting this happen.  I wish that I had paid more attention to the student loans and took over managing them earlier.  Back then Brandon had the attitude that they were his debts and so he should be responsible for managing them.   That's a very noble idea and I was just fine with that.  However,  I've since learned that while Brandon has many natural talents - financial planning isn't one of them.

I wonder if I could have been any better at managing the loans than Brandon.  They are not the easiest things to get a handle on.  There are a lot of smoke and mirrors involved in student loans. They don't come out and tell you, "Hey this is what your loan originally was and this is how big it is today."  Sure that information is listed on the website, but it's not the first thing you see when you log into the website.  Usually you'll see something that tells you that your loan is current with nothing past due.

One problem with student loans is that the management companies are all too happy to put your loan into deferment or forbearance if you can't pay - because they know they will accrue interest the whole time.  Recently I called one of the companies to get some info.  I mentioned that Brandon was Active Duty military and the customer service rep immediately informed me that Brandon could put the loans into deferment as long as he was active duty.  What the guy didn't tell me was that since the loans were unsubsidized the loans would continue accruing interest the whole time they were in deferment.

Even if I had known exactly what was going on with the loans I don't know if we would have done anything differently.  I knew he was in debt when I married him.  I knew the debt was growing while he was in school.  I knew that we still had the debt when he graduated.  Brandon had to fly do get his degree.  And he had to have money to fly.  And student loans were the best option to get the money.

All that is in the past.  I usually stress about it for a while and then I start looking to the future.  Because there is good news in the future.

Brandon is going to become a Warrant Officer this year.  With that rank comes a sizable pay increase.  It wont solve all our problems overnight, but it will allow us to start making large extra payments on the loans.  

Also we have another large tax refund coming our way this year.  Only part of Brandon's income is taxable and so that means we look really poor when we file our taxes.  Between the Earned Income Credit and the Additional Child Tax Credit we get a lot of money back. (It's a nice perk about the military that no one ever mentions.) For the past two years we've put most of our refund toward paying for the Honda.  That's paid off now, so I'm planning on putting a big chunk of the refund into the student loans.

I'm hoping to pay off the three remaining Fedloan loans this year.  Once they are out of the way we just have one large loan through ACS to take care of before it's time to tackle the GIANT loans through AES.  With all the other loans out of the way those four AES loans should fall with in a few years.

  Let's go back to that first chart.  Every year we've been able to pay off more debt than the last.  If everything goes as planned this year we should be able to pay off even more debt. And hopefully we'll be at the point soon where we are paying more principal than interest.