It’s a little embarrassing how many times I’ve written this to you, how many ways I’ve slid references to my giant failure complex into blog posts without really addressing it. I’ve made bold claims that I’m going to stop thinking of myself as a failure and start loving the life I’m currently living in a dozen half-hearted ways, but so far I’m still just rocking back and forth on life’s teeter totter: At the top, I am so ridiculously relieved that I am working (because others I love aren’t) and that I have a healthy work-life balance and that my job is mostly fun and engaging, but when the see-saw rocks downward I remember that I thought I would be doing something different.
The “L” word still makes me feel like a loser.
I know in my heart that I am where I need to be, but I have to remind myself all the time that this life I’m living is something to celebrate, not something to mourn. Sometimes I have to say it to friends and have them say it back to me, to tell me it’s okay. I know that I’m not the only one, but I often feel alone with this. I fold this idea into so much of my blogging because, while this blog is many things to me and hopefully a few things to you, its chief purpose right now is to remind me that life is beautiful and fun and it’s okay to just be who
you are I am right now.
I loved law school. I’m not one to say “Oh, it was so hard and I’m so glad it is over,” and I’ve never regretted attending. It was one of the best things I’ve ever committed to doing. It made me smarter and more attentive and a better person. Even now, while I’m not practicing, I still did all of the things to be a licensed attorney and I can go back to being a “real” lawyer whenever I want to, if I ever really want to.
I’m getting tired of trying so hard to convince myself that I am awesome and that I am making a real difference by working hard for my country. I am already doing these things and it’s become a bit of a broken record for me (and I’m sure not all that interesting for you, my friends). I’d like for this to become a non-issue for me, but it may be a few more months or years before I can really settle into owning my own life and living it for myself. I struggle to surpass expectations that don’t actually exist.
But I think for recovering people-pleasers and perfectionists like me, we often feel like posers in our late twenties. We’re wearing the hats and carrying big titles on freshly minted business cards but are we really good enough to hold this much responsibility? Friends from school are carrying the lives and hopes and dreams of two, or three, or four children already and I can’t imagine ever being qualified for such a hard and important job. Do you ever really feel like you know how to be a mother, a manager, a professor or scholar, or do you just jump in, throwing ideas at the wall, hoping something sticks? I’m always afraid that someone will look over and see that I’m really not as awesome as everyone thinks. I wonder, if they knew how much television I watched in the evenings, and how rarely I finish the books I’m always buying, if they would still want me to mentor their students, or file their taxes, or write their reports.
I paid real cash monies to register for a faith and writing conference in Grand Rapids in April. And I’ve decided that I don’t want to go to this conference feeling that I’m not qualified to be there. I don’t want to awkwardly shift on my feet or avoid meeting interesting people because when they say “Oh, I write a blog about faith and life and my book is being published in October,” and then ask about me, I don’t have a good enough answer. I want to do whatever it takes before I pick up my rental car and drive two hours and forty-seven minutes around the bottom of Lake Michigan so that, when I step out of my car and into the conference, I believe I am a “real” writer and I believe that I am qualified to engage, network, discuss, and struggle with them to create beautiful sentences.
Tomorrow, Thursday, February 20, is the first of fifty days before my conference begins. This may be a rough-and-tumble sort of commitment, but I’ll be doing “the things that writers do” for each of these fifty days so that I can step into the Grand Rapids community with a few pages I can be proud of, with a project I can discuss, or at the very least with the confidence that I certainly belong at the table. I’m not sure exactly what this will look like, but I’m starting this effort off with a Story Sessions writing boot camp and I’ve been thinking a bit about what I want this to journey to include. I have a working list, but before I put it out into the internet world I wanted to hear from you: what do you recommend? What makes you feel like a “real” writer, or a “real” professional, or a “real” mom, instead of just a poser? What gives you confidence in your calling?
I haven’t significantly cut my long brown hair since the Saturday before the bar exam, July 2011. On that day, my hairdresser Allegra told me what a big haircut can mean. Her mother practices Buddhism, and believes the cutting of hair is a release for the whole body: As our bodies process stress and worry, those feelings grow out of our skin into our hair, hanging around with us each day. When we’ve been walking through life wearing our past stresses and worries long enough, when we’re ready for a change in our lives and our souls, cutting off our hair removes the residue of that long battle and helps us to enter into that new stage.
I have been to a few yoga classes this month, but I don’t know anything about Buddhism so I cannot tell you whether any of that is true. I’m not entirely sure any Buddhists out there would read this and identify with that statement in any way. It could be completely misunderstood or misconstrued by me during a bar exam-induced frenzy. But, I’m a believer in the power of a good haircut and let me tell you why: After three years of law school, three months of intense studying, and one significant haircut, I passed the bar exam with no real worry of failure and entered into a new stage of life.
That new stage, which is now my old stage, was rocky and beautiful. I made some deep and lasting friendships, learned a lot, and became much more grounded in who I am professionally and personally. But it was hard. It’s been almost three years now since that last big haircut, and there were a few months in there where I only went to work because I didn’t want to pay a fine for departing before my fellowship was complete, and where I only went to parties when I couldn’t think of a socially acceptable excuse to break the commitment. There were absolutely some days where the veil I wore was too thin, and my actual heartbreak or frustration was clearly visible to those who I like to pretend cannot see the dark edges of my humanity. And, I stuck my foot boldly into my mouth more times than I would like to remember. (I do continue to remember these moments, which is perhaps the worst part of this whole thing called living. Each time I say something horribly ill-timed or inappropriate or unthinking I remember it. Even years later it comes back to me in a disappointing memory which no haircut has as of yet been able to erase.)
Over the last month, I’ve been thinking a lot about getting a serious cut. My hair was just too long, and it was starting to get in the way of things. All of those feelings and memories just didn’t fit onto my shoulders along with the sweater and scarf and coat and hood necessary to survive this winter. I never felt comfortable with my hair sticking out from under a hat and pointing every which way while I walked down Michigan Avenue toward my new office in my new city. In my apartment my hair was straight and lovely, but each time I headed outside toward something new the wind would blow it into tangles and knots. It was time to let go of the baggage and free up some room for warmth and possibility.
I thought that my twenty-eighth birthday would be the time for the big cut, but beginning the day we returned from Las Vegas and until just a few days ago I was so sick I could barely leave the apartment, much less choose a hairstyle and find a stylist. I kept delaying the cut, although I knew how much I wanted it and how ready I was for the change.
This past week, as my cough reduced and my health improved, I found a stylist on Yelp.com and made the appointment. I didn’t realize at the time that my cut was scheduled for the second day of the Chinese New Year celebration, considered to be the first day of the new year, but how perfectly timed it was. As many celebrate the new year by cleaning house to sweep away ill-fortune and make room for good luck (thank you, Wikipedia), I too am chopping off the last three years and starting fresh.
I don’t have a picture for you now. This change wasn’t just about fashion or beauty, it was about being more fully alive, about diving in and seeing what would happen. And so before returning to the surface, I wanted to take the time to share this process. But don’t worry, glamour shots will be headed your way soon. Happy New Year, again. Let’s do something awesome this year.
I’ve been thinking a lot about student loan repayment since I started my research about how it works, and while I don’ t have another “gripping” (ha!) installment of SLR information for you today, I wanted to share what’s been on my mind.
I keep remembering a conversation I had with a beloved political science professor during my last semester of undergrad. This was that professor that would really engage conversations, and argue and force you to think things through. I mean, luckily most of my professors were “liberal” in their belief that students should think critically and come to their own conclusions about things. I’m pretty sure that most days my professors thought I was completely insane and laughed at my ridiculousness and then went home and prayed for my soul… Other majors at my conservative religious private school were not so lucky, and doctrine/dogma was heaped upon them. Not me. Praise God for the liberal arts: for the weird, history-challenging, rhyme-busting men and women who taught me to think. Unfortunately this specific professor tended to get the brunt of my crazy arguments, the ones I hadn’t thought through and that often made absolutely no sense — the ones where I struggled against the church and its oftentimes ridiculous approach to politics.
While sitting in his office to discuss my law school plans, I was explaining how excited I was to have been accepted into my future law school alma mater in Washington, D.C. It went something like this:
Me: I think I’m going to go to DC. It’s where I want to be. It’s the kind of school I want to go to.
Beloved Professor (BP): I see. How are you going to pay for that?
BP: [eyebrow raises]
Me: No, seriously, it’s how you pay for law school. They don’t give scholarships like they do in college, because everyone is supposed to have a stellar academic record. I’m getting a half-tuition discount and that will be enough.
BP: What about living expenses? It’s expensive to live in D.C.
Me: It will be fine; I’ll get a roommate. [I did get a roommate.] I’ll make it work.
BP: You should probably reconsider how you feel about the University of Tennessee’s program. Isn’t it a lot cheaper? [Yes, only $12,000/year after my scholarships were taken out. . . But I had attended a sample class there and I’d hated it. No one had raised their hands when the professor had asked questions. Students spent more time on Facebook than on class discussion. If only I’d known that’s what every law school is like in those mass classrooms.]
Me: Look Dr. ——, stop killing my dreams. I think this is really what I’m supposed to do. Sometimes you just have to follow your instincts and have a little faith! This is where I need to be.
BP: Okay, I hear you, but I just want to be certain you are being realistic. These loans aren’t just going to disappear. . .
I remember this conversation vividly, although the details of what he said and what I said are completely made up. Who knows what we really talked about. What I remember is that by the time the conversation was over, I knew without a shadow of a doubt that I needed to go to DC and live this experience. And I remember being sad that this dream wouldn’t be easy to pay for, and that the people who cared about my future couldn’t be as excited as I was about this opportunity to soak up learning because they could also see how hard it would be to pay for.
I learned that my commitment to following this inner direction [God’s will? Hard to say, but maybe so… Actually, I really do think so, but I’m not always sure how to tell] was stronger than my fear of debt.
And now that I did it, and it’s over, and I’m paying for it, it is hard. Not impossible, certainly not easy, but a worthy sacrifice for a working, thinking, useful brain that can look at shenanigans, spot the real questions, and try to answer them.
- Student Loan Repayment, Part I (pinkbriefcase.wordpress.com)
- Student Loan Repayment, Part 2: what is the risk? (pinkbriefcase.wordpress.com)
- Student Loan Repayment, Pt. 3: compound interest will be the death of us (pinkbriefcase.wordpress.com)
- 10 Law Schools That Lead to the Most Debt (usnews.com)
- The Big Short: Inside the Doomsday Machine by Michael Lewis (nomiresdebajodelacama.wordpress.com)
One of the most important features about student loans is deferment: while you are in school, you don’t have to make any loan payments or even pay the interest on your loans. Any interest you do not pay is added to the principal of your loan. This is called compound interest. Every day that you aren’t paying interest your loan is actually getting bigger.
And while we’re in school, this is probably the greatest thing about student loans. Right? I mean, I lived for two years in Washington, D.C. [this is pre-wedding] on what amounted to 20,900 cash monies annually plus whatever part-time work I scraped up at school. That’s all I had for rent, food, clothes, travel, cable/internet, everything. And honestly, I lived pretty comfortably, even though rent alone was $1100. [My parents raised me to manage my funds well. Thanks, parents.] But, knowing that my extra cash was so low, imagine how easy and oftentimes necessary it is for students to take out maximum student loans and add on extra private loans just to get by.
While you are in deferment, your loan amount grows according to this formula:
[Loan Amount]*((1+(interest rate/365))^(365*[years in deferment]))
So, if you take out a loan for 20,000 at a rate of 7% and then wait 3 years before starting to make payments, your “principal” will actually be $24,398.29. And if you then take your six month “grace period,” you will suddenly owe $25,267.27.
But, here’s the thing — you don’t get to take that $20,000 out just once. You have to take it out every year. So, your second year of $20,000 turns into another $23,559.20 and your third year of $20,000 turns into 21,966.66. So, when your grace period ends and it’s time to start paying back your loans, the $60,000 you needed to pay for school is already $70,793.08. And if we were being more realistic, we’d be increasing the loan amounts by about 10% each year to match tuition/fee increases. But let’s not put too many variables into play at once.
That’s right, you haven’t even started making payments yet, and you already owe $10,793.08 more than you borrowed.
Now, if you can afford to make the Standard Payments to pay off your $70,793.08 in ten years, you will pay approximately $820/month for ten years. I used a standard mortgage payment calculator on the interweb because I am not trying to burn my brain into mashed potatoes with unnecessary math. I mean, this is starting to get out of control. By November 2021, your debts will be repaid and you will be free and clear. After making your final payment, you will have paid the government $97,095.47.
Yes, let’s say that again: $97,095.47.
This number is calculated according to the following formula:
Add end values for all 3 loans to consolidate into one loan amount of $70,793.08.
Subtract the monthly payment you will make: 70793.08 – 820. Let’s call this A.
Determine the amount of interest you will pay: (A) * (rate)/12. Remember, our rate is 7%. So, this looks like A(.07)/12. Let’s call this value B.
To determine where you are at the end of the month, you’ll add A and B. Each month for 120 months, you’ll redo this calculation to determine how much interest you are paying over the course of your ten year loan. You should do what I did and create a spreadsheet so you can copy and paste a formula. Because honestly, do you really want to do 120 math problems by hand? I didn’t think so. My formula looked like this: =(A1-820)+((A1-820)*0.07/12).
So, you are paying $37,095.47 more than you originally borrowed back to the government. That’s more than 50% of what you borrowed.
It’s a little overwhelming, right? And this is if you pay the maximum amounts — you’ll be paying more in the long run on ICR, IBR, or extended payment plans. We’ll get to that, but this is a lot to take in for one post.
I’ll leave you with a quote from Michael Lewis’ The Big Short: Inside the Doomsday Machine. Here, he is describing credit default swaps of subprime mortgage bonds: “He found one mortgage pool that was 100 percent floating-rate negative-amortizing mortgages—where the borrowers could choose the option of not paying any interest at all and simply accumulate a bigger and bigger debt until, presumably, they defaulted on it.” (Lewis, 52.)
It seems a bit similar, doesn’t it?
Please Note: I’m not quite ready to have an opinion about what all of this means. I don’t have any endgame at play for what the right solutions will be, because I think we first need to identify what is causing our problems. So, if you have insight into better questions to ask please do send me a message or leave a comment here. I hope to come to some recommendations by the end of this but I’m just not there yet.
Loans are risky. When you take out a loan, a bank isn’t guaranteed any profits.
- If you take out a loan for $100,000 on Tuesday at a rate of 7% over 30 years, and then you pay it back five minutes later, the bank has made absolutely $0. I mean, there might be a service fee or something, but you get the point, right? They got back the money they already had with no interest added.
- If you pay it slowly and exactly as you have to — without a penny more — the bank is doing great. It has been fully repaid with the expected profits.
- What if you pay your principal down early? You will save money, but the bank will earn less profit from the transaction.
- If you can’t pay the loan back at all and go into bankruptcy, then the bank doesn’t get any more money.
- And if you miss a payment or two? As long as you keep making some payments, the bank does even better: they get to charge you crazy high rates because you went into default and now they make even more money! It’s better for the banks when you pay more.
So, when a bank (or mortgage company or financial institution or whatever you want to call it) makes plans for itself and its financial intake, it has to guess how much money it will receive off different loans (and investments, bonds, etc.). The bank is basically placing a bet on how quickly, if ever, a loan will be repaid. Too quickly means the bank gets the money faster but receives less money overall; too slowly means the bank waits longer for the money but gets more money in the long run. A bank will want to diversify its portfolio so that it balances risky loans with solid loans. That way, you will have some level of profits no matter what happens.
When the government evaluates the Direct Loan program’s portfolio, it needs to do something like this too. To forecast how much money it is paying out in disbursements and measure that against how much money it is taking in from principal and/or interest payments, it has to do some risk-assessment and some math.** But, as I’m sure you’ve gleaned from the last few years of subprime mortgage lending discussions and scandals and so on, honestly identifying risk and treating risk appropriately is pretty difficult. It gets even more difficult when your applicants have little credit history (like college students!). [Or maybe it’s really easy — but that is a huge issue and we’re moving on.] This is a huge, complicated risk determination that really smart finance-people make, and there’s not a lot of recent literature about how the government does this.
A 2009 study by the National Association of Student Financial Aid Administrators called for more information about how and why students default on loan payments. This study reviews the literature on student defaults (which it labels as outdated) and points to some factors that make students more likely to default on student loan repayment. In its conclusory paragraphs, the study reminds its readers that if we were to stop providing loans to students who are at a greater risk of defaulting because they come from families with weak credit histories or who are at a greater risk of not graduating for any number of other reasons, then we will be undercutting the student loan program’s goal of making access to postsecondary education available to all students, regardless of income.
**I’m searching for summaries of the formulas that the government uses to forecast how much income it will have from student loan repayments given the clearly fluid repayment system we operate within. If you have any resources or knowledge about that, please do send it over! GAO, CBO, and Ed.’s websites have been unhelpful thus far.
So, here’s the thing. I hate my loans, I hate being tied down by law school debt, and I heard about a plan for making that better by reducing the monthly payments for income-based plans from 20% to 10%. I also discovered that under this proposal, the loan forgiveness option for public servants — that’s those persons like me who work in nonprofit/government/public service jobs full-time — would be decreased from 10 years of payments to only 5 years of payments.
And I got excited. This would be fantastic, I thought. I would be five years closer to being debt-free, and I would be five years closer to being a homeowner. I would have the flexibility to start a family when I wanted to instead of having to push that off so that I can fulfill my public service working commitments to pay off law school.
A petition popped into my personal email account and I checked out the details, thought it was a good fit for me, and posted a link to that petition on my facebook wall. I thought other students or graduates would want to know about the proposed bill and that they might want to support the initiative.
And holy moly did hell break loose on my facebook wall. And on all of my friends’ walls who reposted the link. People who were years out of school, who owned homes already and had families already, people who weren’t waiting for those things because of debt had a lot of opinions on the subject. I pay all of my bills, they said. I only went to a school I could afford, they made sure to mention. I won’t pass my debt off onto the American taxpayers. And so on.
And because I generally know some things about those I associate with, I know that many of those commenters had trust funds or drove Mercedes or were called to jobs that did not require advanced or particularly prestigious degrees, which probably makes it a lot easier for them to spout off high-and-mighty statements about the financial choices of others. And I wasn’t upset really, except I dislike bitterness and hatred and prefer for people to use reasonable arguments and logic when interacting with my internet spaces. But it got me thinking:
Is accepting my ten-year loan forgiveness plan in exchange for working in full-time public service really stealing from the government?
And of course, it isn’t. Participating in a repayment plan developed by duly elected representatives from the fifty states is certainly quite in line with my rights as an American citizen. But, I was kind of annoyed and started thinking that perhaps I should learn a little bit more about what I was paying, where those charges came from, and how much I really “owed” America.
And let’s back up a little — I am not a “money” person. I never took a single business, finance, economics, etc. class in college and while I can analyze a poem with the best of them, I don’t always understand financial theories and “the market.” I only made a B+ in secured transactions. Secured Transactions is a course in law school where you study the Uniform Commercial Code, how people buy and sell debts, how mortgage-backed securities work, how America rips off third world countries, etc. But, if I can’t figure this stuff out then how can I expect my facebook commenters to do any better?
So, I’m on a mission. I’m going to figure out exactly how much money the government loaned to me, and I’m going to compare that amount to how much I currently owe to them. I’m going to see how much profits they are making off of me if I repay over 25 years, or if I repay over 10 years, or if I participate in my public service loan-repayment plan. And then we’ll see how the world feels about loan forgiveness.
What I know right now is this: no one in this country is missing any meals because I went to law school. On the contrary, the Direct Loan program’s weighted average subsidy rate is estimated to be -16.77 percent in Fiscal Year 2012. For you non-finance people out there, this means that the government is EARNING money on the student loan program (as in, not losing money) at a rate of 16.77% this year.
And that’s including the ten-year public service payoff plan that I’m participating in, people who are defaulting and not paying because of hardship and people who are unemployed due to our terrible economy. So imagine what that number would be in a good year.
Edit: another article I’ve read seems to question if risk is factored into subsidy rates so I’m rescinding this statement until I know for sure.
Update: “Subsidy rates represent the Federal portion of non-administrative costs—principally interest subsidies and defaults—associated with each borrowed dollar over the life of the loan. Under Federal Credit Reform Act rules, subsidy costs such as default costs and in-school interest benefits are embedded within the program subsidy[.]” So, I’m pretty sure my original statement is right. But it’s not like they make this easy to understand.
And also, in case this needs to be said, I pay my bills. I save my money. I went to a private university for free, and paid for my own living expenses. I take my lunch to work most days, and I wear my shoes until they fall apart. I have quite a lot going for me and, compared to others who are really suffering under the weight of tremendous debt and a terrible job market, I’m doing pretty great. But I’m annoyed for all of us that our character and value to society are so easily attacked because we are willing to say that the current system is not working, and I want to know a little more about all of this drama.
- Law Students Are Reluctant to Talk About Their Student Loan Debt (taxprof.typepad.com)
- Is Getting a J.D. Degree a Good Investment? (careercenter.dsa.umich.edu)
- A Future in Politics Less Desirable Among Today’s Pre-Law Students (usnews.com)
- While White House Emphasizes Easing Student Debt Burden, Fed Contractors Play Hardball (scottsdaleluxuryrealestate.wordpress.com)
Well, it’s over. Three years of learning, eight weeks of studying, two days of testing have come to a close. Now, we wait.
Bar results will be released on November 4th. Until then, my review books are packed away and my law books are slowly being mailed away one-by-one to poor pitiful half.com purchasers.
These days are new and exciting and empty. Switching from weeks and weeks of working non-stop and riding the emotional roller coaster of fear to waking up whenever-you-please and doing whatever-you-want is confusing, uncomfortable. All I want to do is cuddle up to a good book or have long conversations with friends — difficult only because now that the bar is over I have absolutely nothing to talk about.
For the next four days, I am cuddling up to Zadie Smith’s 2000 Bestseller White Teeth while staying at the Royal Palm with my family on a beautiful island. I’ll be eating fresh seafood and soaking up the sun and collecting myself.
This is a fresh start for me – everything I am doing from now on is completely different, with no school, no giant loan checks to pay for whatever I want, no self-directed semesters with only two testing periods a year.
I can’t wait.