Neoblogs: A New Home

We are currently in the midst of recreating our blogosphere in hopes to bring back the many neobloggers in the fellowship.

  • New additions include now a base site that displays all the most recent posts from current authors.
  • Linked sites for better navigation
  • Updated user functionality for both readers and authors

If you would like to start your own blog or migrate your existing blog back to our new home feel free to contact me at [email protected]

Current users may also contact me for support with updating themes and looks for their blog site.

To access you blog site just click you name listed on the site to take you to your blog page, then just click the login link on the side!


As those of you who have blog sites may have noticed, you should have received an email to set up a new password. This was cause by a transition in our database to make future endeavors much simpler. If you have ANY issues logging in please contact me.

As far as linking social media with your blogs, we will be using Jetpack, you can find this on your dashboard. To do this follow these steps:

1) Log into WordPress and go to your dashboard
2) Towards the top left-hand side click on the “Jetpack” tab
3) It should go to a screen with a giant banner saying to log in with your credentials, along with 6 bubbles of options below it. Click on the giant banner to login and create a new user for yourself (its really easy)
4) After this go back to the previous page and click on the “Sharing” bubble.
5) Once there drag in the social media forms you would like, i.e. twitter or facebook. Make sure you are logged into those accounts. Then simply click the connect button.
6) Before you save at the bottom make sure to change the “Button Style” to “Official Buttons” and then on the “Show Buttons On” section, click the “Posts” tab.
7) Then save and it may take a few minutes to show on your blog, as always if you have any issues, shoot me an email ([email protected])

What Happens If You Can’t Pay? Part 2


Last post, I got a little too caught up in the fun of student loans and realized 900 words in that I hadn’t even gotten to the intended topic of the post yet. So I am going to hop right in here and start discussing what happens when you default on your student loan payments.

When you default on your loans, a lot of things happen. A lot of bad things. First off, the whole balance of the loan plus interest becomes due immediately. Whereas before, only the minimum payment was due each month, now you owe the whole amount right now! And if you can’t make those monthly payments, there’s no way you can pay off the whole thing. This process is called acceleration. The lender might also turn over your loan to a collection agency, who will attempt to wring the money out of you.

And there are a lot of ways for them to wring the money out of you! The federal government can have your employer garnish your wages. This means that money will be automatically deducted from your paycheck and sent to the government in order to pay back the defaulted loans. The government can garnish up to 15% of your after-tax wages, and they can do this without a court order. Lenders of private loans can have your wages garnished too, but they will need a court order.

Also, the government can withhold your federal and state tax refund. Instead of getting a nice tax refund, the IRS will hold your refund and instead have it apply to your defaulted student loan debt. The official term for this is a tax offset.

If you had difficulty with student loan payments before, imagine how much more difficult things will be when your wages are being garnished and your tax refund is taken from you.

Going into default on your student loans will also wreak havoc on your credit score. A credit score is a “statistically derived numeric expression of a person’s creditworthiness that is used by lenders to assess the likelihood that a person will repay his or her debts (Investopedia).” Your failure to repay your loans will be reported to credit bureaus, who will significantly lower your credit score. A bad credit score will make companies averse to lending to you, since are now seen as having a risk of not paying back your loans.

A bad credit score can make it difficult or impossible to get a home mortgage, a car loan, or any other type of loan, including a credit card. If you can get one of these, it will most likely have high rates and other unfavorable terms designed to protect the lender in case you default again. A bad credit score can affect you in ways other than your ability to take out loans. Landlords can deny your rental application because of poor credit. Utility companies could choose not to work with you, or make you pay a large deposit up front. Insurance companies will also do a credit check before issuing you a policy, meaning you may have to pay higher rates for car insurance, renter’s insurance, or homeowner’s insurance. These problems associated with a bad credit rating won’t go away once you get back on track with your student loans. Credit ratings take a long time to recover, and it will take years of financially sound living to return your score to a good rating.

This all seems pretty bad, right? Defaulting on your student loans can affect you in ways you wouldn’t even imagine. Who would think that you could be denied rental of an apartment because you failed to pay back your student loans? But that’s the way things operate in our world, and we need to be aware of the far-reaching consequences of defaulting on student loans.

And it doesn’t end here. When you default on your student loans, you can also be charged several other fees; late fees, collection fees, or even attorney fees and legal fees if the lender takes you to court (which they can and may very well do!).

If the financial obligations of paying student loans is overwhelming, they can be discharged in bankruptcy. However, I would not recommend this step. Getting your loans discharged through bankruptcy is extremely difficult, and there are many other consequences associated with declaring bankruptcy.

So, putting it all together we see that defaulting on your student loans will have a drastic effect on your life. If you were having financial trouble with your life before, going into default will end up making things even worse! The balance of your loan will increase with all the added fees, and the whole amount will be due immediately. Your credit score will tank, and you’ll have to deal with all the problems associated with that. Factor in the all the stress related, and we can see that it is a messy situation indeed. This is why it’s so important to think about your loans and take them seriously. No one wants to end up in this situation, yet many people do. As I said in the last post, you don’t want to be that 1 in 10 who will default on their loans.

The best method of avoiding default on your loans is to be smart about them. Don’t take a single cent more than you need. Plan out your payments, even when you are still in college. This will give you a better idea of the cost of your loans, and you can determine how much you could reasonably pay back.

On the other hand, if you are having difficulty paying your student loans, or have already defaulted, there is hope! The worst thing you can do is get discouraged and give up. In a later post, I will be covering what you can do if you are faced with such a situation.

I know I’ve thrown a lot of information at you in these posts, but I believe that in order to be effective with our loans we need to understand them outside and in. I think we’ve reached that point; now it’s time to get into the good stuff. The next few posts will cover some best practices for student loans. I intend to cover all walks of life, from high schoolers just looking at college and loans, to people who have graduated and are paying off their student loans right now. Student loans can really mess up your life, but they don’t have to. It’s all up to you.

Last days in India & lessons learned.

Last conference

Last conference


When I got to home, I felt like I was on vacation. Home was easy conversation, beverages with ice, and fun things to do. India was hot, fast, and filled with prayer. My friends welcomed me home happily and so did my bed. Remnants of India pop up—like being surprised to find toilet paper in the bathroom, brushing my teeth with water from the tap, and driving on the right side of the road (or driving at all!) But, I keep feeling like America will be over and I’ll be back in India soon enough…


The strangest thing about coming back is how life is slow. Everything about India is intense and fast-paced—the traffic, the music, the preaching, etc. Here, it’s grocery shopping, cleaning, work, sickness before anything else. It’s harder, it’s slowing down… No, it’s distractions and meaninglessness. (Ok, not that intense, but it’s definitely anti-climactic coming back to real life. I know this is common for many coming back after a spirit-filled missions trip, but I did not expect it.)


I also hate coming home and seeing my sin. Somehow, I forgot about my communication issues, control issues and my extreme amount of self-absorption while I was in India. Then, I come home and boom–here it is flaring up as strong as ever. It made me so depressed the first few days, until I realized I was just feeling sorry for myself and that I can quit being a baby and think about other people.


Despite these negativities I once again adopted upon coming home, I realize I am home for a reason. I had this beautiful, wonderful, amazing experience in a far-off country that is filled to the brim with sheep without a shepherd to come home to another country full of sheep, waiting for a kind, patient, gracious, loving shepherd. So, here I am. I am so inadequate in every way, but God taught me in India SO much about how kind he is that he will take anything you try and do for him as a gracious, life changing present for the building of His kingdom. He smiles at my little efforts and passions as if they mean the world to him… while in reality, my “gifts” are probably more like the dead mice my old cat used to leave at our doorstep. He’s good.


So, here’s the last of India that–I hope–lasts forever.

Such good kids!!

Such good kids!!

The last few days in India were a blur. The conference ended, and I was exhausted. It was a harder conference overall—it was EXTREMELY hot and we didn’t connect with the women like last time (Prati didn’t even speak their language and there were many more women there). We did, however, get to hear from one of the leaders. She was very willing to share with us and was an all around thankful, joyful person. Praise the Lord. I didn’t realize that if they don’t have teams from countries like ours they have to cancel the conferences—that’s so crazy. So, these women really did look forward to us being there and appreciated us immensely.


One thing that was very cool was that the women got up and shared how this conference has struck them. They mentioned each one of our teachings—how God used us to inspire them or corrected wrong views. It was crazy to see how God used our simple studies to encourage and equip these women! Many copied notes to take back to share with their villages! That was one of the most rewarding moments of my life—Prati leaned over and said, “See, your labor is not in vain.” If only all ministry was this obviously impactful… (I take back all complaints I made about studying for India teachings before the trip–HELLA worth it!)

Praise the Lord!!

Praise the Lord!!

The last day, we went shopping in Hyderabad. It was so much fun! This is coming from me who hates going shopping with a passion—any kind of shopping, I hate it. Seriously, I go grocery shopping once a month at most. Prati took us to an Indian mall. I stuck with Caitlin and Adi, my buds, and it was a different experience. It wasn’t too crazy because it was a mall and not street shopping, but it was different than America and I liked that. My favorite purchase was a ridiculous polo t-shirt for Zak (which consequently, he wore when he proposed to me). Men in India wear really patterned/colorful button-down shirts regularly.


Beautiful view from our last hotel...

Beautiful view from our last hotel…

The last meal with Prati was sad, but fun. It was also some of the best food we ate all trip! A pastor (who took us shopping, lol) joined us. We made it to the airport and after a long time in line, we said bye to Prati. I sincerely hope I can spend time with her in the future. She is one of the most encouraging people I’ve ever met (if not THE most). She’s worn-in and humble, but confident and beautiful in Christ. Talk about #lifegoals. I’m tearing up right now thinking about how grateful I am for her guidance and encouragement this trip. I will never forget the words God spoke through her to comfort us and empower us in him. She motivated me to love and know Jesus more–which is my ultimate goal with anyone I meet. I was honored to be her disciple for two weeks and I think of her and rush to my word so I can be as strong as she is someday.


Everyone was surprisingly in good spirits the last day and travel day—for the most part. I think we all got a little sick of planes. I kinda hit a point of frustration being in Amsterdam as our flight was delayed (I’m bitter at that place because it did not give me what I want—wahh.)

I miss Naan

I miss Naan

We got to the Akron airport and everyone dispersed. I couldn’t take it. I went to the bathroom before seeing my family and cried a little thinking about how amazing it was to spend two weeks with such beautiful women for Christ—people I look up to and admire entirely. I’m so grateful for their patience, company, and that these spiritual giants would even give me the time of day. It was so much fun in every way.


We said bye and India was over.


I can’t help but feel, again, like I’m going back. I probably won’t, obviously, anytime soon, but I hope this feeling motivates me to share God’s workings in India with people here. And I hope he forms in me a heart of compassion, confidence, and of relentless faith.


These are the things I learned in India.


Compassion for anyone and everyone. This is kind of obvious because I went to India which is full of hurting people. But, I’m overwhelmed by how beautiful they are. All of them. Coming home I realize I didn’t even see my friends this way. Now, I am struck by how much they matter! How much others should saturate every second of my life! How much I love to help and encourage and be of any need I can to beautiful people created in the image of God! I had to go to India to learn this because of how hardened I am. But I encourage you to think about who you encounter daily and view them as God does. Is that hard? Yeah. So, start your day in the word to set your mind to how he views them. Your life will change. People aren’t a problem, anymore. They aren’t annoying (as much, lol). And they’re valuable. The most valuable things in the world! Even the poor in the streets of India… Oh, how the Lord loves them and us and everyone you meet.

Gypsy dancers!

Gypsy dancers!

Confidence in God and His word because his goodness is worth living for and his righteousness cannot be ignored. This was beautiful to learn. Why would we doubt God’s word? Why do we lack confidence when we act on it or teach from it? No. It’s God’s word from God to humanity. There is nothing more that we could be confident in. I love that he taught us this. The Bible became so much more important to me. Though, I must confess, upon coming home I was busier than I’ve ever been in my life. I neglect the Word often and I feel it. But the couple of times a week I do open it, it illuminates my life. A goal from India is to soak in the word, daily. To discover who God is through it and to understand the depths of his care for us and his plan all along. I am so thankful for classes like LTC to teach me how to do this so I can gain confidence in God and my words to others aren’t light, but saturated in the deep truths of his love for us.


The realities of the new life we have. I might write a separate blog on this when I am emotionally stable enough to do so because the new life is still too amazing to comprehend. One thing I will say is that I hardly thought about what having a “new life” in Christ before I went to India. In India, my guilt and negativity consumed me often and God reminded me repeatedly of the new life in Christ to depths I literally had never imagined before. What confidence we have in this!!


How precious every life is. Even yours. Kinda riding off of the last point… I get SO stuck in the thought that I don’t matter in God’s plan. But I do. He lavishes grace upon grace onto me for a reason. He’s given me a purpose and a mission. He loves me so much and delights to see me delight and gives delights in blessing me. I play a huge part in expanding his kingdom. SO DO YOU! Do not take what you have been given lightly and DO NOT let the devil infect your perspective of who you are. You are fire and you’ve been given the chance to spread it. People need fire. Imagine if we never forgot this? We would never need to turn to anything to fill us/waste our time. I would not need to sit in front of a mirror doing make up 15 minutes a day to feel worthy or watch netflix for an hour to experience joy–no. I CAN take everything from Him with joy in how much He loves me!

Myself & my friend/sister in Christ. She preaches POWERFULLY and we are the same age!

Myself & my friend/sister in Christ. She preaches POWERFULLY and we are the same age!

Do not doubt God. He takes your little steps of faith and turns them into a marathon of accomplishment. I was humbled to see what my creeping up to the podium in front of women that first day did for them… I realized this CANNOT be my own power. No. There is a God and he took this simple message and spread it deep within the hearts of the women there. Eternities will be changed because of the steps we take in our lives. Even if it seems like this step  of faith is useless or you don’t think this person will listen– YOU NEVER KNOW! Either God will change lives with it or he will teach you something great about who he is– or both! I have seen this play out since being back in negative and positive ways. Negative because I see myself going back to the old ways of doing things without faith–manipulating and cutting down the severity of the truth to appear “cool”. I’m ashamed of doing these things. When I do it, I remember what God showed me in India: be bold, do not be ashamed, and do not think that my efforts will go unnoticed by God. He will come through. He will take your steps of faith and his spirit will accomplish more than my persuasion and manipulation ever could. He’s already shown me such things here as one day I just asked one girl what her objections were to receiving Christ. I prayed with her to receive Christ that day. This was God’s power, not mine. No fancy lingo and over-preparation, just faith in God’s truth.


→ Here are some things I think I touched on in the other blogs, but would like to add to complete my culminating ending point. So, here:

(Sidenote: I wrote two other lengthy blogs on my trip while in India. I could not post those publicly due to names/places travelled. If you are interested, I can send them to you personally.)


Friendship is one of the greatest things we can have in this life. A sad fact that I did not know this as strongly going into India, but during and coming out of the country, I am so thankful for friends–for the good and bad and especially grace.

Friends :)

Friends :)

You are exactly where you are supposed to be. So take it with both hands and do something beautiful for the Lord. He’s waiting for your first move, putting chances in front of you and lessons to learn. Do not sit and think “if only”. No, the time is now. These are the days we have. Let us rejoice in them and make His name known.


God is so good, He blows me away. Far, far away. What an exciting adventure we have in store as we get to learn the great lengths of his goodness.

Me & my beautiful sponsor child. (And her mother!)

Me & my beautiful sponsor child. (And her mother!)

What Happens When You Can’t Pay? Part 1

Yesterday, the Department of Education released some good news about student loans. In this press release, the Department announced that the default rate for student loan payments dropped over the past year. Why is this good news? Well, the default rate is the percentage of borrowers who are unable to repay, or default on, their student loans.

To calculate this default rate, the Department of Education looks at all borrowers who started repaying their loans three years ago. The number of those borrowers who were unable to repay their loans at some time throughout those three years represents the default rate. The fancy name for this rate is the “Three Year Federal Student Loan Cohort Default Rate.”

The default rate just released by the government is 11.8%, which means that of the 5.1 million student loan borrowers who began repaying their loans sometime between October 1, 2011, and September 30, 2012, 11.8%, or 611,000 people defaulted on their loans before September 30, 2014. This is a drop from last year’s default rate, which was 13.7%. In fact, the default rate has been trending down recently, as the rate the year before that was 14.7%.

While this is good news, it still shows that there is a significant problem with student loans. The default rate shows us that over 1 in 10 people will default on their loans within three years of starting repayment. Take a look around your class the next time you are in one – 1 out of every 10 of those people will be unable to pay back their student loans at some point. And maybe, one of those people will be you! Hopefully not, and hopefully these blog posts will help you to avoid that.

In this post, I want to go in depth on what happens when you, like 1 out of 10 people, default on your student loans. There are many severe consequences to this that people don’t realize. But before doing this, I think we need to do a quick clarification on a couple things.

First, what exactly does it mean to default on a student loan? The technical definition is “the failure to make payments on your student loan as scheduled according to the promissory note (contract) you signed when you took out the loan.” For most federal loans, the loan will be considered in default if you go 270 days without making a payment. For private loans, when the loan is in default is determined by the contract.

Second, what causes people to default on their loans? There are a lot of decisions people make that unwittingly set them up for default years down the line. I want to take a look at some of these different scenarios, because some of them might happen or might have already happened to you!

1) The Over-Borrower. Someone who takes out way too many loans. They take out more loans than they actually need for tuition, and spend the rest on other expenses. Could also be someone who goes to an expensive university. They graduate with a heap of debt, and quickly realize that they aren’t able to meet the minimum payments on their loans.

2) The Too-Much for Too-Little. This is a person who took out student loans to get a degree that isn’t really feasible for a career. In essence, they paid too much and received too little. We can all make jokes about art majors working at Starbucks, but it is a real and unfortunate phenomenon. Some people take out loans for a degree that will not earn them enough money to pay back those loans! Or worse, some people can’t even find jobs for their degree. This specific situation is covered more in the next point.

3) The Under-Employed. We know our economy has unemployment problems. Something that isn’t talked about as much is under-employment. Under-Employment is when an individual has to take a job in a field that they are overqualified for because there are no available jobs within their field of study. These jobs almost always pay less, and the low pay can cause some people to default on their student loans.

4) The Career-Changer. This person quickly finds out the career field they majored in is not the one for them. Whether the stress level is too high, or they just don’t like it, they leave that field and try to find a job elsewhere. The only problem with this is that it is hard to find a job with an applicable degree. Many people in this situation end up in jobs with lower pay, and are thus unable to make the required payments on their loans.

These situations are all traps to avoid, because falling into them gives you a higher chance of defaulting on your student loans. When choosing what school you’ll attend, what degree you’ll earn, and how many loans you’ll take out, you need to really calculate whether you will be able to pay back those loans or not – you don’t want to be a part of that 11.8%.

Whew, that was a lot of stuff already! And I haven’t even gotten into the topic I actually wanted to cover; what happens when you default on your loans. However, I want to keep things at a manageable level, so instead of overwhelming you with more information, I am going to end this post here. The next post will cover the consequences of defaulting on your student loan payments. Sorry if I misled anyone, and be sure to check out the next post, as it contains some seriously frightening information you won’t want to miss.

The Different Types of Student Loans

If you’ve been reading through these blogs, I’m sure that by now you are sick and tired of hearing about student loans. If that’s what you are thinking, then too bad, because I’m going to be writing about student loans again. In this post, I’m going to be taking a look at the different types of student loans available.

The first distinction among loans that we will look at is federal loans and private loans.

Federal loans are loans that are offered and funded by the federal government. Private loans are any loans through an institution that is not the federal government. This could be a bank, a credit union, or some other sort of non-federal agency.

Let’s do a quick comparison of federal and private loans. Federal loans have a fixed interest rate that is set by Congress. The interest rate for a private loan is set by the lender. The interest rates for a private loan can be variable, meaning the interest rate could rise. While you are still in school, you do not have to pay interest on your federal student loans. Federal loans also offer several different repayment plans, have no prepayment penalty, and can qualify for a forgiveness program if you work in public service. This is guaranteed for federal loans. For private loans, it depends on the contract drawn up by the lender, and many times these advantages are not included in private loans.

Private loans also tend to be more expensive than federal loans. The interest rate for a federal direct subsidized loan is 4.29%. If you are looking at taking out a private loan, make sure it has an interest rate lower than the federal standard. However, keep in mind that the interest rate on private loans can change. When offered a private loan, check the contract to see if the interest rate is variable or fixed. Some companies will offer you a lower starting interest rate to lure you in, then raise the interest rate in subsequent rules. As a rule of thumb, it is best to avoid private loans, and if you must take out loans, take out federal loans.

Let’s focus more on federal loans and the different types of federal student loans a person can take.

The first type is a direct subsidized loan. A direct subsidized loan has a fixed interest rate of 4.29%. The interest that accrues while you are in college (enrolled at least half-time) is paid by the federal government. However, once the grace period is over, you will have to pay the interest yourself. Another way to think of it is that when you begin repayment of the loan, the amount of your loan to pay back will still be the principal. In order to qualify for a direct subsidized loan, you have to demonstrate financial need. A disadvantage to this type of loan is that there is a small fee (around 1%) charged for taking out the loan.

The second type is a direct unsubsidized loan. Everything here is the same as above except for two things. First, the government does not pay interest that accrues while the student is enrolled at college. However, that does not mean you have to pay the interest while you are in college. You can choose to hold off paying the interest penalty-free until the grace period for the loan is up. If you choose to do so, then the amount of the loan at the end of the grace period will be the principal plus any accumulated interest. Secondly, financial need does not need to be demonstrated in order to qualify a direct subsidized loan, anyone can receive one.

The next type of federal loan is a Perkins loan. A Perkins Loan is similar to a direct subsidized loan, in that the interest is paid for you while you are in school. However, the interest rate for a Perkins loan is higher, currently fixed at 5%. On the other hand, there is no fee charged when you take out the loan. In order to qualify for a Perkins Loan, a student will have to demonstrate significant financial need, greater than what is needed for a direct subsidized loan. A final difference is that the lender for the Perkins Loan is your school, whereas for other types of federal student the lender is the federal government’s Department of Education.

The last type of federal loan is a direct PLUS loan. This type of loan would not be taken out by a student, but by their parents. It is intended for parents who are paying for a dependent child’s education. direct PLUS loans have a higher interest rate, fixed at 6.84%, and a high loan fee, 4.272%. A direct PLUS loan is like an unsubsidized loan in that interest is not covered by the government while the student is in school.

This has been a lot of information, but from this I think we can draw a couple helpful points.

First, avoid private loans and stick with federal loans (unless you find an amazing deal even after reading through the fine print).

Second, subsidized loans are much better than unsubsidized loans. For subsidized loans, the government will pay your interest payments for you while you are in college. For unsubsidized loans, while you can defer payment of interest while in college, you will have to pay that money eventually.

One of the reasons many people fall into serious financial trouble with their student loans is that they don’t understand the provisions of the different loans they take. Many people find themselves in unfavorable contracts with private lenders, or took out unsubsidized federal loans not realizing that interest would still accrue while they are in school. Hopefully this post will help you to be smarter about what loans you take.

But what about the people who are struggling to repay their loans? What happens when the burden of loan payments is too much and you can’t feasibly meet your minimum payments anymore? The consequences of failing to meet your loan payments will be covered in my next post.

How Student Loans Work

In my last post, we looked at the different elements that make up a student loan. Today, we’re going to look at a student loan in action. We’re going to create a hypothetical example to see how these different elements work together.

Meet Billy. Billy is a recent high school graduate who will be attending Kent State University. In order to fund his education, Billy takes out a $10,000 loan with a 4% interest rate to help pay for college. $10,000 would be the principal and 4% is the interest rate. Interest would not accrue on the principal amount until after the grace period (which is defined in the loan contract).

After the grace period, interest starts to accrue and Billy has to pay back the loan. Billy’s interest is calculated monthly. So every month, interest is added to Billy’s principal at a rate of (4%/12). On the first month, Billy would have $33.33 of interest accumulated. If Billy were to make a payment of $100 on his loan, that $100 would first be applied to the interest. After paying off the $33.33 of interest, the remaining $66.67 is out towards repayment of the principal. After that payment, Billy now only has a principal of $9,933.33 left.

For the next month, the interest would be calculated on Billy’s principal balance, which is $9,933.33. So at a rate of (4/12%), Billy would have $33.11 due in interest. If he makes another monthly payment of $100, he would pay off the interest of $33.11 first and the remaining $66.89 would be applied to the principal, reducing it to $9,866.44. This will continue until Billy has fully paid off the principal of the loan.

Under this payment plan of $100 a month, it would take Billy just over 10 years to repay his student loans (10 years and 2 months to be exact). Billy would also have paid a total of $2,187.20 in interest. This is where the true cost of student loans is revealed. This $10,000 loan that Billy took out might look like it only costs $10,000, but it actually costs $12,187.20!

But that was just for our example. As I mentioned in my first post, the average student loan debt for a graduate of Kent State University was $31,543. The interest rate set for direct subsidized loans (we’ll discuss what those terms mean in a later post) is 4.29%. Let’s stick with a loan term of 10 years, which is the standard for repayment.

Using these figures, our “average” calculation spits out a monthly payment of $323.72. At the end of 10 years when the loan is paid off, that person will have paid an additional $7,303.76 for interest.

As you can see, the interest on a loan makes a huge difference. When looking at taking out loans, you need to factor in the total amount of the loan that includes interest, not just the principal. Our friend Billy might have thought he only had $10,000 in loans, but in reality he had to pay back much more than that!

Another interesting thing of note is that when you make a payment on a student loan, the payment is applied to the interest first, then any remaining money is applied to the principal. When talking to people about their student loans, this was something a lot of people expressed surprise about. But it’s an important fact to consider – you may make a $500 payment for your loans, but your principal will not decrease by $500. It will only decrease by whatever is left of that $500 after interest is paid. So, the more interest that accrues on an account, the harder it is to pay off the principal of the loan.

The effect of interest on student loans is not to be underestimated. The more interest that accrues on your account, the more money you will have to pay, and the longer it will take to pay back your loans. As I mentioned before, look at the interest rate and it’s projected effect when taking loans in order to get an accurate look at what your amount you will eventually have to pay back.

If there’s one thing that you’ll hopefully walk away from this with, it is that the amount of loans you take out is not the amount you will pay back. You will pay back much more. Think realistically about your loans, think of them in the amount that you will have to pay, not the amount that you received.

Here is a link to a useful loan calculator. Plug in the information for your student loans – what you find might be a little bit surprising, and maybe even a little bit scary. Maybe it will motivate you to think differently about your loans.

Well, that is all I am going to write for today. Next up on the schedule will be a comparison of the different types of student loans you can take.

Elements of a Student Loan

In my first post, I discussed some of the consequences to carrying a large student debt. How there are spiritual consequences in addition to financial consequences. Hopefully the post made you think more about your situation in regards to student loans.

One thing I have found when talking to people is that they don’t really understand their loans and how they work. It seems as though many are content with taking whatever loans are offered to them and leaving it at that. Here is an article that touches a bit on the fact that many students don’t understand what they are getting into when they take out student loans. This lack of understanding is a main factor when people struggle later in life to pay back their student loans.

The goal of this post is to educate people on some of the basics of their student loans. My hope is that with a better understanding of student loans, people can make better decisions in regards to them.

First, we’re going to take a look at the different elements that make up a student loan to help us get a better understanding of the concept. There are 5 elements that we will be covering; principal, interest, interest rate, term, and repayment.

Principal. The principal is the amount of the loan that you took out. Essentially, it is the money you borrow and receive from a lender. So if you took out a $10,000 student loan, that $10,000 would be the principal.

Interest. Interest is the amount that you are charged for taking out the loan, in addition to the repayment of the principal. Interest is how lenders make money on loans. Interest is calculated using an interest rate (explained below). Most loans have a grace period, where interest is not charged. This grace period usually lasts until 6 months after a student graduates or leaves school, but it varies by loan.

Interest Rate. The interest rate is the percentage charged to the principal to determine the interest. Interest rates are displayed by their APR (annual percentage rate). However, interest is calculated in many different ways, such as annual, monthly, daily, or even continuously.

Term. The term is the amount of time the loan is for. So if you have a loan that you have to pay back in ten years, the term would be ten. However, for student loans this is not usually fixed – the term will be dictated by your minimum payment, but you can decrease the time of the loan by increasing your payments.

Repayment. Repayment is the paying back of the loan. Repayment starts when the grace period ends. Most loans usually require you to make a monthly repayment. There will be a minimum monthly repayment on the loan, however you can pay back more than the minimum if you want. You can also pay back less, however, this will cause you to be charged fees, and if you fail to meet the monthly payment for several months your loans could enter default.

So there we have it – principal, interest, interest rate, term, and repayment. I’m going to stop here for today. This part is getting a bit technical, so I don’t want to overwhelm anyone as they read this.

For the next post, I’m going to create an example of how these different elements work together. In this example, I think we will also see some of the hidden costs of student loans that people don’t see until it’s too late.