A couple of days ago I ran into a friend at an audition. We were talking about life after graduate school and she told me how she was planning to consolidate her student loans that week and start paying them back. Normally that would be a great thing but this is June and after you graduate from school you have a six-month grace period that ends in December.
So I asked her, why so early?
She then said she didn’t want the built up interest and just wanted to start paying it off. While this makes sense if you are becoming a lawyer or a doctor and will eventually make a boatload of money, for an artist it isn’t so simple.
As an artist you will probably never make a whole lot of money. If you know how to save and budget, then you can achieve and acquire everything you want, even a second house in the Hamptons, but it will take a while.
Most people graduating from an artist graduate school are between sixty and one hundred twenty thousand dollars in debt. It also takes on average around six years before actors and other types of artists make enough money to pay off the required monthly amount which will be between three hundred and one thousand dollars a month.
Until then the government has income based repayment plans that let you pay what you can afford based on your income and the poverty level of the state you live in. It also states that if you haven’t paid back the amount in twenty-five years you get to claim it as taxable income and it is erased.
The sad truth for artists is that we are never going to pay the full amount back in twenty-five years and therefore should take advantage of that fact. Keep your money! Don’t put more towards your loans than you have to. Now if you do start to make enough money great! Pay off those loans; but if you don’t then take advantage of the government program. Along the way don’t pay more than you have to. Keep the money in your hands and put it in savings, invest it, let it gain interest and plan for your future. Don’t pour it all into a debt that has other options for paying off the amount.
If you pour all your money into paying back your student loans, then you can’t afford your rent, your groceries, and you might even need to go on unemployment or welfare. Instead of draining government systems that already have an undue burden, support yourself and simply take advantage of the student loan programs provided.
-Consolidate you loans in October so you won’t start paying too early.
-Take advantage of the Income Based Repayment if you have to.
-Don’t pay more than is asked of you. Keeping your money in your hands for as long as possible is good.