What is the Smartest Way to Get In Debt? – Joie

“Dear Steve,

I am 100% debt free. No mortgage. No car payment. Nothing owed on credit cards. No student loans, even though I have a four year BFA from a reputable school. I’ve got less than $10k in savings but it’s growing. I make approximately $29k a year. I even have money in a growing 401(k). I have been extremely lucky to end up this way.

So I’m sure you’re wondering why I’m writing to you? Well, I’d like to go on to higher education and get my Master’s. The circumstance that allowed me to get out of undergrad debt free is not around this time, and I will have to pay my own way. Having less than $10k in savings, I will obviously need to do student loans.

The situation surrounding this school is that it is in a VERY expensive city. I will not be able to work full time… perhaps not even part time to complete this rigorous program. There are not a whole ton of scholarships for graduate students, and my school does not offer scholarships to its students right off the bat. I’d have to 100% subsist (tuition, books, and living expenses) on student loans.

I’ve read some things on your site and I’m a little nervous about student debt. I’d like to go about it the smartest way, but I’m afraid I don’t know a whole lot about the system. I don’t wish to jump in blindly and end up in a bad spot years down the road. So– and I bet you never get THIS question: What is the smartest way to get IN debt so that it’s manageable?

What is the smartest way to get IN debt?


Dear Joie,

Oh my gosh. I laughed so hard when I read your question. You made my day. I never get questions like this one. Awesome!

If you are going to go for a student loan the best advice I can give you is to STAY AWAY from Sallie Mae and any private student loan lender. Go for loans that are offered directly by the U.S. Department of Education, click here.

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Government loans have the most flexibility in repaying them and offer real programs to assist borrowers if they run into problems in the future. In fact, recent changes to repayment programs otherwise known as the Obama Student Loan Program, will go into effect in 2014 and give people an option to repay loans with payments that are no more than 10% of their income. This is something no other lending resource offers.

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You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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2 thoughts on “What is the Smartest Way to Get In Debt? – Joie”

  1. Hello Steve,

    I’m really happy that you answered my question. Thank you so much! It’s been a few months, but I’m midway through some online summer courses and have therefore started with my student loans. I chose to do one summer of courses from my home in Atlanta, as the living expenses here are incredibly cheaper than they are in San Francisco, California.

    Thus far I’ve got around $10k in student loans, and my upcoming 2011-2012 year is going to get me about $33k. Luckily, they are ALL government loans! I’ve got subsidized and unsubsidized, and then also elected into their “Grad Plus Loan.” It’s only because of the Grad Plus loan that I’m able to avoid private loans thus far. But here’s the scary thing that most people don’t know: Grad Plus loans charge you interest while you’re in school. If you don’t pay the interest while you’re in school, that amount gets added to the principle amount! Did you know that? This could get ugly really fast, I imagine? How bad do you think this will be?

    Either way, I’m doing everything that I can to avoid private loans. I’m gonna be living on a shoestring, and attempting to feed myself for $35 a week or less. Also looking for a cheaper health insurance. I’ve been applying for every scholarship that I can, even if it doesn’t apply to my situation (haha! Might as well try, right?) I’ve been talking to other people who do have private loans and hearing their horror stories. Thank you for helping me out, and I’m sure I will update again later.

    Any other tips or advice?


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