I'm a first-gen college student and when I got my first loan offer I genuinely didn't know what half of it meant. APR, origination fees, subsidized vs unsubsidized, grace periods — none of it was explained. My parents couldn't help because they'd never been through it either.
Some things I wish someone had told me earlier:
– Subsidized loans don't accrue interest while you're in school. Unsubsidized ones do — and that interest capitalizes the moment you graduate.
– A 1-2% difference in interest rate sounds small but on a $30K loan it can mean $3,000-5,000 extra over the life of the loan.
– Your first few years of payments are mostly interest, not principal. You're barely touching what you actually owe.
– You can make extra payments toward principal at any time with no penalty — most servicers just don't tell you that.
For anyone else who felt completely lost when they first signed — what do you wish you had known? And for those further along, what actually helped you get a grip on it?
Asking because I genuinely think first-gen students get the worst deal simply from not having the right information early enough.
Nobody prepared me for how confusing student loans actually are and I don’t think that’s an accident
byu/Character_Original51 inStudentLoans
Posted by Character_Original51
7 Comments
I’m also a borrower and a first time college student in my family who was accepted to an Ivy League MFA.
The system is purposely complicated and students like us without resources are at a disadvantage. We don’t have family lawyers or even admission counselors to guide us.
I had to put in tons more work than others just because I didn’t have those resources.
I’m teaching in Spain and in 9th grade they have finance classes to learn all the basics about banking, investing, etc. I also used to work with an afterschool program for underserved youth in middle and high school in Chicago and we would teach financial literacy.
Reading your comment made me think of how intentional it is to keep Americans in the dark about credit and debt, etc.
Edit: typos
Student Loans are simple interest so interest accrues daily. So there is no period of time where “you’re paying mostly interest and not touching principal”. Obviously payment will go to any outstanding interest first, but it isn’t like a house or a car where the interest is built-in and you pay that down first. That’s precisely why there is no penalty for early payment.
Your parents don’t know how a loan works? There’s nothing magical about student loans. This is all basic finance concepts.
My parents weren’t first gen, and nobody explained any of it to me either. Heck, I graduated a few years ago and only just now found out about the origination fee.
Not an accident and so predatory
Then: “go to college or you’ll be poor forever” and “here’s the money to do that” and “dont worry you can use these payment plans to repay it later”.
Now: “student loans are making you poor, why did you go to college? You should have made better choices”. *payment plans disappear and get replaced with more expensive ones*. “It was at the bottom of page 57 of the EULA you clicked agree to 15 years ago.”