The Motherfluffing School Debt

Still going slightly out of order…

Angie asks:

You’ve talked many times about your school debt. Now with hindsight, is there another you would have/could have paid for college and grad school? And do you plan to pay all of the college expenses for you girls? How are you working toward this? Good thing you don’t mind talking about your finances!

Just for you, my darling readers, I went and looked up exactly how much Mr. A and I owe in school debt right now.  I hope you appreciate it, because now I am having an anxiety attack about debt.  I hate debt.  I hate it, I hate it, I hate it.

Right now, this is the state of our grad school loans:

My Grad School debt:  $15,221

+

Mr. A’s Law School debt: $54,573

_________________________

Combined (oh my effing gosh):       $69,794

So about 10 years after Mr. A graduated from law school and 7 years after I finished grad school, we still owe about 70 grand.  Sadly, this is much less than we originally owed.  I think Mr. A got out of school with $120k and I think I owed about $33k (several thousand of which was borrowed to cover the rent while Mr. A went on his big bike trip….dumb, dumb, dumb.)  The really good news about this debt is that it is all government loans and the interest rates are super low  ( I think around 5% for Mr. A and 2.7% for me).    We pay $315 and $353 each month.  At this rate, my loan would be gone in about 5 years and we will have Mr. A’s loan FOREVER.  (The length of his loan repayment doesn’t bother me that much because if he ever dies, his loans evaporate so neither I nor his estate will be responsible for them.)

All those loans are for grad school and law school.  Both Mr. A and I had full-ride + living expenses scholarships for our undergraduate degrees because we were National Merit Scholars.  (We both had the same scholarship…does that mean we were meant to be?)

If I could go back in time and change things, I don’t know if I would have gone to grad school at all.  If I had known I wasn’t going to work once I had kids, I probably would have waited and gone to grad school once they went to elementary school full-time.  I didn’t have the slightest inkling I would quit work, so I made what I thought was a responsible decision at the time.

I probably still would go at some point because my degree has been an insurance policy that has always made it very easy for me to get a job.  (My degree is a Masters in Nonprofit administration and there aren’t many of them around here, but I also recognize I have never had to job search in an economy like this one!)  If anything happens to Mr. A or to my marriage, I am glad I have that degree to help me get my foot in the door at a job.

If I could, I would go back and try to borrow less money to pay for school.  Maybe I would have asked my parents to kick in the money they didn’t spend on my undergraduate degree (they paid for 4 years at a state school for my sister and would have paid that amount for me if I hadn’t had a scholarship.)  I might also have paid more money down each month (like an extra $50).

Mr. A’s degree was stupid expensive, but totally worth it.  He went to a top-tier law school and did pretty well, so he has never had a problem finding a job and has always been paid pretty well for the work he does.  I wish he had spent a little less time at “bar review” (aka drinking with other law students) with his loan money, but as an investment, his degree has really paid off.

We have made trade-offs on other financial goals that meant paying down our school loans faster has been put on the back burner.  Since I was about 26 and Mr. A and I combined our money, I have always put the maximum amount in my 403B each year I worked.  I think that is $13,000 a year, pre-tax.  Mr. A maxes out his 401K at that amount too.  My parents put $2,000 a year in a Roth for me when I was 20-25 too.  I just checked our retirement accounts and it looks like we have a little over $150,000. With compounding interest and all that jazz, that should be a nice chunk of change if we keep adding to it.  We are 34 and 37, so Mr. A still has about 30 good working years left in him.  (I hope!)

If you measured the amount I hate debt and compared it to Mr. A’s obsession with retirement planning, it would be about equal, so we are always going back and forth about this issue.  Because our loan interest rates are so low, I think we made the right choice saving for retirement while we pay them down.  If we hadn’t had kids so soon after school (or lived in San FranFreakingExpensive before we had them), I think we would have paid them down sooner, though.

For the girls, we hope to be in a position ot fully pay for their undergraduate degrees.  I expect that to cost about $200,000 in today’s money for each of them (i.e $200,000 plus inflation).  We contribute $75 monthly to a 529 fund each month for each of them.  My parents make generous contribution each year and most of their birthday gift money goes into those accounts.  Right now, they have about $18,000 combined which would be enough for one kid to go to school for maybe one semester (depressing!).  If they get scholarships or choose to go to a state school, I think we would give them the remaining money for graduate school.  The same goes for learning a trade that would provide a good job skills and make them employable.  That money is only allocated for education though. No fancy weddings or round the world trips funded by us.

I don’t expect the 529 money to reach $200,000 by the time they get to school.  Hopefully, in 10-12 years when M heads off to college, Mr. A will be earning more money than he is earning now.   If he doesn’t earn enough to fully pay for it out of pocket, I might be willing to get a part-time job (or even full time, the horror!) to pay the difference.  Maybe.

I will admit this has been a difficult post to write honestly.  I waffle between feeling A) OK about our financial choices and worrying that other people will feel annoyed that I am sharing them and B) worried that people who have more will think we should be doing much better given the amount of income we have.

Any way you want to look at it, Money=Stress.