The Biggest Mistake I Made With My Student Loans

For the last few months I’ve been sharing our monthly debt payments. I’ve let you in on how we add more money to our payments each month without sacrificing money from other categories, and simple ways that we’ve saved each month. But I haven’t shared with you what was, by far, the biggest mistake I made when it came to my student loans.

So what was by biggest mistake when it came to our student loans?

It wasn’t watching my undergraduate loans capitalize interest while I was enrolled in a Master’s Degree program and not making some sort of payment towards the interest. I understood this would happen. At the time we were a family of 3 living on less than $10,000 a year, so any money we had went to bills, child care and food.

It wasn’t letting my graduate university constantly switch around my program requirements. I understood they were revamping the program when I initially enrolled. From the get-go they had started swapping out things that I was able, and not able, to do. At the same time, I also knew that I would take more time than usual with my degree and teaching certifications. I also didn’t need my extended schedule to get in the way of Hubs’ schedule for his degree.

My biggest mistake wasn’t even the fact that a year after Hubs graduated with his degree, we moved 3 hours away from our graduate school and I had to be enrolled in two separate universities just to to finish my degree and teaching certifications. The two years I spent my days sitting in the car and a classroom, using my credit card to fuel up to get where I needed to be, and my nights as a mom to two young boys or spent at prenatal appointments is a complete blur in my memory. But that time taught me that I don’t want to miss out any more on my children’s youth than I already had. No, that’s not my biggest mistake.

My biggest mistake when it came to my student loans was filing for economic hardship for two solid years without making a single payment. Two years!

I filed for economic hardship at the recommendation of a customer service rep with one of my loan companies. At the time I filed, our combined income was not enough to cover Hubs’ payments, let alone mine. Even substituting had become too unpredictable and inconsistent. I knew I had to pay the loans back, but at the same time, we were stuck income wise. I couldn’t sign my children up for daycare for a minimum of three days a week to remain on the list, and not work that week. It didn’t make sense. I was losing too much money.

During those two years, I was also constantly applying for for full-time employment. Full-time employment meant it had to cover daycare costs for three children. It had to cover fuel costs back and forth. And finally, it had to be enough to make sure there was money left to contribute to our budget. Full-time employment in my area is hard to come by, but employment that meets those three criteria is even harder to find.

For those two years, my interest capitalized. Not nearly as much as my undergrad loans capitalized while I was a graduate student, but they capitalized a lot. Those two years of interest capitalization added over $22,000 to my loan balance. I was already struggling with not having full-time employment. Watching that balance rise certainly didn’t help.

During that time, I should have filed for Income Based Repayment rather than Economic Hardship. Yes, under both cases, interest capitalizes. But under Income Based we would have been making an effort to pay something on them, whether it was $5 or $50. Even $5 would be $5 I’m not paying back now.

But without that hindsight, I don’t think we’d be on this path that we’re on. It may have been my biggest mistake at the time. But right now, that big mistake is helping to give us the greatest drive to get out of debt. And in the end, the eye on that prize is all that matters to me.