I love to read the newspaper. Each morning, Sam (my son) and I walk barefoot out to the curb and bring it in. For awhile, I got it and he watched, then he got it and I watched. One day it slipped out of the bag; since that time he has requested help, so now I grab one end and he grabs the other.
If the newspaper’s weight was measured in knowledge, this shared workload would be necessary, but in reality we just look odd, rather I look odd, he looks cute, he’s two so he always looks cute.
Anyway, it seems like any type of news media loves to discuss the cost of college and the associated student debt. I went to a private Christian college, so my expenses were high, but my parents were in favor of the school, they were paying my tuition, and as an education major I knew my earning potential upon graduation. I also learned the real cost of money when I promptly lost my academic scholarship due to an over commitment to dorm life.
Suddenly, I had $7,000 in student debt.
This ballooned to $13,000 after graduation when my dad loaned me money for the down payment on a new Ford Ranger pickup. He gave me $6,000 which we simply added to the potion of my student loan that I was responsible for (we had taken out loans, but my parents were actually the ones paying for them, hence the $6,000 transfer). In hindsight, I wish my dad had slapped me with his fat wallet, and declared, “You can’t afford a new car because you don’t have any money, and you don’t need a truck since you are a teacher, I can’t believe I raised such a moron.”
Instead, we talked with Uncle Sam, he approved the transfer (he never says no) and just like that I had 13k in student loans (and another 10k or so on a truck).
Happily, I plugged along earning my first paychecks and dutifully mailing them right back out. I was the middleman between my employer, Uncle Sam and Henry Ford; maybe it’s one of his son’s by now, either way I licked stamps, wrote checks, and wondered if I had misunderstood how a job works.
I wasn’t depositing much.
As a district employee I soon realized I needed to begin taking graduate classes. An undergraduate degree is good enough to get you the job, but not good enough for you to keep the job, to do that you need at least 24 more credits. Shortly after enrolling in two classes, Uncle Sam sent me an unsolicited letter. He was so pleased to see me furthering my education that he didn’t want me to make any payments for awhile, he called this “deferment”, “just keep your money and we’ll talk in a couple months”, he said.
What a benevolent fellow.
He did say something about charging interest during this deferment, but he’s my uncle, surely he has my best interests at heart. Well it turns out that Uncle Sam has many nieces and nephews, and he was deferring payments left and right, to the point that he forgot all about mine for awhile (he is pretty old). Finally, he must have cleaned his desk, because I received a letter asking me to restart payments on my loan. Fortunately my interest rate was only 2% or this story would be much less amusing to recall. Everyone likes big numbers when it comes to money so I’m happy to report my number was bigger then when I’d last seen it.
Now flash forward a few years, and I’m happily married to a studious woman who is finishing up physical therapy school. I soon learned she was receiving mail from Uncle Sam as well; briefly the legitimacy of our marriage was called into question. We did some research and found that our family trees merged with Uncle Sam around 1776, which cuts it a bit close but she’s gorgeous so I swept my incestuous concerns under the rug.
Now between the two of us, our debt load approached 80k, and our payments were a new car like $576 or so per month. To top things off, Uncle Sam was charging her 7% interest which was closer to loan shark then loan between families.
I sensed that we might still be paying for our schooling when we deposit our own children at the dorm so I vowed to make a change. With the stroke of a keyboard, we took money from savings and paid off my loan, Uncle Sam never even sent a letter of congrats.
I began to questions his motives.
We then began to throw even the change from the couch cushions at her loan; we also refinanced it through a friendly non relative called “Sofi”. Our interest rate dropped from 7% to just over 4%, and our loan term was reset to only 10 years. Today our balance is slightly over 40k, we are making the minimum payments. However, we know we can pay it off in full within 3 years using stock options proceeds from my wife’s previous employer.
Uncle Sam sounds like a nice guy, when he’s sending you letters, but really he’s just advocating that you pay an extra 5-10% on your already expensive college tuition. Once he starts sending you bills, don’t expect family treatment or forgiveness, he wants and will get your money, don’t fall for his trap.
If you haven’t already, check out Sofi through this link, if you refinance they’ll send me a check and one to you as well. Win win!