Choosing between Higher Education, Loans and Family
This is a column by regular contributor Clark.
A friend of mine who holds a Masters in International Studies had a dilemma a while back about whether to pursue her dream of getting a doctorate from Switzerland’s Graduate Institute of International and Development Studies now or take care of immediate concerns and put off the degree until later.
The friend in question has nurtured her dream to study in Europe for a long time and has a passion for the subject as people who go for doctorate degrees should. She got married while in grad school and became a mother within the last year. While she was pregnant, she discussed her goal again with some of her friends, including me, at a get-together and being the personal finance enthusiast, I chimed in with my money-related thoughts. I had questions about her financial situation and learned that she and her husband had student and credit line loans totaling ~$35K. Her husband makes a decent income and she was on the verge of completing her schooling at that time. They were renting and, except for the car payment, had no other consumer debt. Below are some of the areas we touched upon.
1. Income. Since the husband (though willing to move) may not be able to make as much money if they relocate, they’ll have to make do with her scholarship/aid (she was confident in getting one). I do not know about employment opportunities for people on spousal visas in that country but I guessed it was not going to be easy.
2. Loans. With a baby to care for and loans to repay, it seemed prudent (to me) to take care of immediate concerns. Finding a job in Canada and working to pay off loans aggressively was a good solution. If the dream lives on after a few years, then they’ll have an option of going overseas with loans repaid and hopefully some savings to support them. The kid could get international exposure at a young age and they could decide how they want things to go from there (settling or returning).
3. More Debt. They may need to borrow money if they are relocating immediately to cover initial expenses (there was no emergency fund per se, despite this not being an emergency situation).
4. Relationships. Maintaining a long-distance relationship by letting the husband take care of the loans and the baby (with help from her parents and in-laws) was an option but she, unsurprisingly, rejected it immediately.
5. Unfulfilled Dream. There was a possibility that the dream may never materialize as other things take precedence.
Some friends were opposed to putting off the dream/passion. They suggested talking to the lenders about deferring student loan payments, selling off the car, borrowing from parents to pay off the credit line, and going to live (study) the dream. My friend did not give any indication as to which side she was leaning and we parted ways. After months of limited contact through a few emails including a mass one about the birth of her girl, we met again. She mentioned that she’ll be starting a new job in the fall and added that she had two offers – one, a temporary position for a year with better pay and the other, a permanent one with lesser pay; she had chosen the permanent one. There was an element of sadness about the decision and I realized that familial and financial considerations had taken precedence. She said that she had no immediate plan for the higher education and will let life take its course for the next few years.
I’m going to go ahead and say that the dream may have disappeared forever (I hope I’m wrong). It is not impossible that she may pursue it in a few years but chances have dimmed considerably. Do you think there was a lack of proper planning in her case? I do not have experience with delaying student loans. So, I am wondering under what circumstances a borrower can seek deferment of student loan payments? Does it matter if it is a federal or private loan?
Have you let any dream/passion take a backseat to concentrate on other things? Do you think you will chase it at a later date?
About the Author: Clark is a twenty-something Saskatchewan resident employed in the manufacturing sector. He repaid around $20,000 in student loans and has been working to build his investment portfolio as a DIY investor (not trader) while nurturing plans to retire early. He loves reading (and using the lessons learned) about personal finance, technology and minimalism.