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How bad of an idea is it to take out a student loan to get me out of my situation?

Ask the Bitches: I Want to Move Out, but I Can’t Afford It. How Bad Would It Be to Take out Student Loans to Cover It?

We have a question today from a Tumblr follower. If you don’t follow us on Tumblr, you should! Piggy is one of the Tumblr Deep Ones. She’s been on the platform since its infancy, and she answers tons of reader questions.

Like this one!

I need to move out, but I don’t have any money actually saved up. I do have a job that can cover my monthly costs and still have some left over. So I was wondering just how bad of an idea it is to take out a student loan to get me out of my situation and then immediately work on paying it off.

Ah. A very relatable dilemma.

For most people (and families), housing is the largest item in their budget. Young people spend, on average, a quarter of their income on housing—more than any other age group. Which means that saving money on housing can have an enormous positive impact on your finances. Especially when you’re young.

But is it ever a good idea to strategically spend a lot more than you have to on housing? Spoiler alert: yes, it absolutely can be.

Let’s get into it!

The psychological importance of controlling your space

I’ve got a theory that it’s a demon—a dancing demon!—nah, something isn’t right there. Sorry. Piggy and I have a friendship that is 35% Buffy the Vampire Slayer deep cuts by weight. Let me start over.

I’ve got a theory that the biggest developmental milestone for young adults is figuring out how to establish and defend appropriate boundaries. Two-year-olds learn to poop in potties. Six-year-olds learn to read. And somewhere between 18 and 30, young adults learn how to tell their boss to stop texting them at 9 p.m.

A key component of establishing appropriate boundaries is gaining control over your own space.

This is an essential biological need. Even herd animals are territorial of their physical space. We’ve talked before about how Maslow’s Hierarchy of Needs classifies physical safety as an essential need that, if not met, inhibits all other personal growth and development. Meaning: when you control your physical space, it’s easier to control access to more abstract territories like your time, your attention, and your emotional investments.

If you can’t control your own space… well, you can still control those other things. But it’s gonna be a whole lot harder because you’re not working from a position of strength and security.

When you need to move out

The letter writer says, and I quothe: “I need to move out.”

I’m always inclined to take people at their word. But for the sake of the broader audience, I’ll try to unpack this a little.

We don’t have information on the letter writer’s exact situation. Are they trying to get away from annoying parents? Oppressive parents? An abusive romantic partner? Roommates who crunch chips too loudly? An existing apartment with a too-long commute or a negligent landlord? Does his negligence look like chipped paint, or toxic mold?

Each of those situations has a different level of urgency. All are valid reasons to want to leave. But only some of those reasons may take precedent over the general goal of financial wellness. And that line isn’t the same for everyone.

If your living situation is not safe

Fuck money.

Get into all the debt you need, just get the hell out. Your life is infinitely more valuable than whatever money you lose.

You may not even need to lose money. Do you know how many people I’ve had crash at my house, for weeks or months, totally rent-free? Four, in as many years. They were all over the board: a friend, a family member, a distant acquaintance, and a total stranger. That’s one of the best parts about being rich, which is a thing I am now! I get to extend my stability to other people, huzzah!

There are people out there who want to help you. Find us. Use us.

More for those in this situation:

If your living situation is safe but not healthy

Stop and assess.

And maybe try to leave the house to do it. Go to the library or a coffee shop—somewhere you can decompress and think clearly.

Do you have other options? What are your immediate goals? What do you think the limits of your patience are? If you have to compromise, what compromises can you live with—and which can you absolutely not?

If you’re at this point, you’re probably pretty frustrated. And frustrated people can act like someone they aren’t. So organize your thoughts. Journal about how you’re feeling. Use a pro/con list to weigh all your options. Assess your current budget and recent spending habits. Explore whether now might be a good time to ask for a raise.

More for those in this situation:

If your living situation is merely less-than-ideal

Hate to say it, but… welcome to young adulthood!

Awkward roommates, lousy apartments, long commutes… everybody goes through this at some point. Everybody. So congratulations! You’ve unlocked universally familiar adult experiences! I can confirm that old people sit around reminiscing about the busted places they used to live in like they’re war stories.

My partner and I lived with roommates for many years before we finally got a place of our own. It was a cost-saving measure. Got student loans to pay off, and you make chicken scratch? Try living with five to six other people!

Some of those roommates were lifelong friends, and living with them was fun as hell. Other times you end up living with insufferable weirdos who insist on keeping their worm hutches in the living room, despite said worm hutches being infested with soil gnats and mildew. (If you comment on this post to tell me that we needed to add more carbonaceous materials, I swear to god…)

I hated having to wash a pile of other people’s dishes. I hated initiating conversations to debate the ownership of said dish pile. Most of all, I hated the stony formality that followed these debates, with the concurrent complaints they would inevitably unearth.

But when I was ready to scream, I reminded myself that I was saving about $1,000 every month by living with so many other people. If I had to wash a pile of 25 dishes every week, I reasoned that it was like being paid $10 per dish washed! And that’s a pretty sweet gig!

The willingness to put up with annoying circumstances pays a pretty spectacular salary.

If you’re in this situation, think about what you could do to offset the unpleasantness. Let’s say you’re saving $600 per month by living at home. Could you tough it out for one more month, or two, or three, if you know there is light at the end of the tunnel? Or could you take $100 of those dollars and spend them on yourself with occasional day trips, or daily lattes, or whatever you need to keep your sanity intact?

And yes, we stan the spendy coffee:

We only stopped living with roommates when that math no longer added up. A day came when you literally couldn’t pay me $10 to wash one more roommate’s dish. We were finally willing to spend $1,000 more dollars every month for the heavenly asylum of living independently. And we appreciated it so much more because we waited.

Consider your mental health

A warning.

Poor Mental Health, with her ride-or-die squadmates Depression and Anxiety, can make you misjudge your own resilience.

You may underestimate your ability to endure because you’ve catastrophized a manageable problem. You can also overestimate, because mental illness makes it harder to visualize positive alternatives and take steps to make them a reality.

So if you know you struggle with mental health, take that into consideration. Lean on your network to give you objective observations and help you plan accordingly.

Exhaust options other than student loans

Before you take out student loans for living expenses, I would exhaust all other opportunities.

  • Tough it out for a few more months to save enough to not need a loan.
  • Crash on someone’s couch to do the same.
  • Seek a raise at work.
  • Look for a new job that pays better.
  • Explore if there’s a friend or family member who might lend you the money, assuming you trust yourself to repay in full and on time, so as not to jeopardize the relationship.
  • Tap into your emergency fund if you have one.
  • Put it on a credit card with a lower rate than the loan, maybe with the plan to transfer off a lower introductory rate before a higher rate kicks in.

Etc., etc.! You may have more options than you realize.

If none of those are viable, yes, you can turn to student loans for living expenses. Just… don’t do that because a loan avoids the conflict, anxiety, confusion, or bruised pride of seeking help elsewhere, m’kay? Young people are at a vulnerable time in their lives. Now’s probably the time to cash in those chips. No Person of Quality will think less of you because you ask for help in a time of true need.

Using student loans for living expenses

Assuming you’ve done your due diligence: yes, you can take out a student loan for living expenses.

Student loans aren’t just for tuition; they are for your education. You can take them out to pay for on-campus housing, off-campus housing, utilities, groceries, or other living expenses while you are a student.

Will the loan originator track how you spend the money? Generally not. Keep good records anyway. It’s a good habit to start, and it’ll make filing your taxes easier. Yeah, you can sneak your Netflix subscription onto there. The consequence isn’t that you’ll get in trouble. Rather, it’s that everything will cost you much more money in a few years when the collection process begins.

If you consider taking out a loan, I strongly suggest calculating its lifetime cost assuming minimum payments, rather than its initial cost. The difference between the two can be utterly jarring, and may change what you decide. There are tons of free loan calculators out there. You only need to know three numbers to calculate the actual total cost: the amount, the length of time, and the interest rate.

For example: a $10,000 loan at a 6% interest rate over 10 years won’t cost you $10,000. It will cost you $13,300.

And this is why getting a good interest rate is so important. The same loan, over the same period of time, with a 12% interest rate? $17,200. Collar-tuggingly close to twice what you originally borrowed! $10K may be worth it, but $18K may not be, depending on the severity of your situation.

Lenders will show you lots of glossy pictures of happy, pore-free students eating salad alone and beaming at the sheer joy of their low-low monthly payments. This is psychological trickery and marketing flim-flammery. Do the math so you know what you’re getting into.

My advice

It sounds like our letter writer is in a pretty good place financially. They have a job that pays enough to cover expenses, with a bit left over.

Given that, I’d say they can safely take out a student loan for living expenses. But this is assuming two things: (1) that the living situation crosses their personal threshold of untenability, and (2) that the letter writer has explored other options, and a loan is indeed the best one.

If that’s what you end up doing, letter writer, I advise you to shop around extensively to make sure you’re getting the lowest rate possible. Don’t package it into an existing loan just because it’s easier. The difference of a single percentage point can equate to thousands of dollars. Compound interest be wacky, yo!

Keep your living expenses as modest as you can, because it does add up. Use the money left over every month first to establish a small emergency fund, then to start paying down your highest interest loan. If you’re steady and responsible, using a credit card as your emergency fund is a perfectly viable way to focus immediately on debt repayment.

Finally, let your newfound peace and quiet inspire you to greater heights in your career and personal development. Go forward with all the best wishes of the Bitch Nation at your back, like a gentle summer breeze.

Folks, how’d I do? Have you faced the saving-on-housing versus spending-on-sanity dilemma? If so, tell us about it the comments below!

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7 thoughts to “Ask the Bitches: I Want to Move Out, but I Can’t Afford It. How Bad Would It Be to Take out Student Loans to Cover It?”

  1. One thing to consider, especially if there’s a lot of other debt floating about, is that student loans never ever go away even in bankruptcy. Other debt, like personal loans and credit cards, can get discharged as long as you make a good faith effort to repay it. Bankruptcy should be a last resort but it’s not even that for student loan debt.

  2. Do some solid calculations on how much money you need to move out — not just first & last month’s rent, but application fees & credit check fees, moving costs (boxes, tape, pizza/beer/gas money for friends who help, a truck if you have enough stuff that you need to rent one), utilities startup costs, & anything essential you don’t currently own like a bed, sheets, dishes, microwave, coffeemaker, computer. Think about all the things you’re sharing where you live now that you can’t take with you — what will you need on an everyday basis? Even at a thrift store, the costs add up. Also, will a new home affect your commute? More gas money or bus fare?

    The more prepared you are with the numbers, the better you can decide if that loan is a good idea.

  3. We lived with my in laws for about 6 months after we got married in 2008. It was very generous of them to let us stay there rent free, and I cringe thinking back on some of it because we did not really appreciate it at the time. Nevertheless, there came a time when we had! to! move! Saving 90% of our income be damned. If we stayed much longer, I was going to say something to irreparably damage my relationship with my in laws, and they are gonna be in my life a loooooong damn time. We treaded water after that while we lived in a cheap, run down apartment, but our time with them gave us the ability to save our down payment for our first house.

  4. I think it was Liz Pulliam Weston who suggested as a heuristic never to take out more loans for college than the average starting salary in your major. That seems pretty reasonable.

    Definitely agree with if your living situation is unsafe, take loans out. Otherwise, do some hardcore cost-benefit analyses including interest rates and don’t go crazy.

  5. I love how organized this post is in terms of thinking through the problem and then thinking through various options, not just focusing on the student loan question. As a parent of a college grad and current college student, I worried as much about the living conditions as the academic factors. Your environment, including people around you and physical space, is a big deal and part of the overall investment. This is where the saying, “Penny wise, pound foolish” is useful — I wouldn’t be so focused on saving that I stay in a bad situation. I wouldn’t wish that on my kids.

  6. can you find shared accommodation or get a second job for evngs or weekends or summer.. or apply for school grant to waive tuition, etc…

  7. I can tell you first hand that borrowing student loan money, or any money, is a bad situation to get in. I went back to school after working 10 years as an RN in ICU. I went into nursing anesthesia which is an intensive training and study program. Working during the program is almost impossible for most people. I had a family to still care for, so my loan amounts were in the stratosphere. This was 2008 through 2010 with a student loan amount of 150k at 6.6% to 7.5% range. I also took a 2nd mortgage for 150k. Yes that’s 300k! Sure, I more than doubled my income from 70k to 140k. My wife also went from an LPN to RN and started working. That put all that interest I paid as a waste since I couldn’t write it off against my taxes, which skyrocketed since I was considered “rich” by the government. I didn’t buy anything new or join any country clubs. I could barely make the interest payments. My new loan amount actually ballooned to 180k when I started paying it the summer of 2011. Fast forward to 2019 and I’ve paid in the 100k teens but my loan amount is 152k!!! WTF man. I paid off the 150k 2nd mortgage by selling that house. So by the end of October my new balance will be in the 130s. I changed jobs that allowed me to work extra as well as pay in the 200s. Since July, I’ve been paying weekly and refinanced with a 5yr variable around 2.37%. My payment is $2600 which is more than double of what I was paying with half the interest rate. I’m also paying $1000 to 1300 extra the other 3 weeks of the month.
    So, don’t take student loans where you can help it. There will be pain involved somewhere.

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