From the article: Should I Pay Off My Student Loans Early?
It isn't until you graduate that you realize just how much money you borrowed to pay for school. This may be attention to credit card debt as well. Looking back, what would you do differently when it came to taking out your student loans? Share Student Loan Tips
Pay it Down!!!
- After college I was $300,000 dollars in debt with interest rates between 6.5-8.5% for a doctoral degree in the medical profession... I started paying on a 10 year plan and my monthly payments were about 3500. After a year and a half I realized it was much smarter to choose an extended 25 year plan and put the remainder towards the highest interest loan. When converted to extended repayment I owed about 2000 a month and I paid an extra 1600 towards the 8.5% loan. This saved me thousands of dollars in the long run and freed up income once segments began to be paid off. I highly recommend doing extended repayment and putting every spare dime into your highest interest loans. Unless you have a guaranteed investment that will give you more than your interest amount % in gains after taxes are paid.
- —Guest Matt the Indentured Servant Doctor
Choosing graduated repayment plan first
- I graduated law school with $120,000 in debt spread over 9 loans with interest rates varying from 6.8 to 8.5. I wanted to pay off my debt as quickly as possible so I chose a standard repayment plan and overpaid my loans. What I realized after some thought was that I should choose an extended graduated repayment plan because it allowed me to lower my payments on all my loans by $600, which I then paid towards my high interest loan. This payment scheme allowed me to pay off my highest interest loan in a year (instead of 10). After I paid that loan was paid off I took the extra money and paid off the loan with the next highest rate. To be clear, I never changed the amount I paid (i.e., I was making the same payment under the extended graduated plan than I did under the standard plan). The only difference was I didn't pay as much towards the low-interest loans. At the end of the day, this plan saved me a ton of money. I only wish that I started sooner.
- —Guest Quicker Payer
Private Loans are a NIGHTMARE
- with a $100,00.00 loan my daughter suffers with stress daily, we are co-signers to he loan and are too affected! she recently was layed off work and is freaking out about this HUGE burden! so are we.. Please to all that are looking into student loans DONT" parents DONT" co-sign!! Sallie Mae is THE WORST!! at first they promise you the MOON but now they want their payment regardless!!they are voltures!!who are these employees and how do they sleep nights? plus they are in INDIA!!this is our country when it comes to our FUTURE! it's not only sad but disgusting how young adults are required to OWE so much when all they did wrong was get educated here in USA!! President OBAMA please do what is right and fix this insanity of student loans that is killing our future students and work force in the medical field as well as so many others!We voted for you cuz we know you of all would understand!
- —daughterhasloan
Invest at least some ammount
- Won't suspending all your investing cause you to lose compounding time? Who wants to start saving years and years in the future? It is important for me to see I wam working for my own benefit, not just to pay off some other investor who bought bank stock.
- —Guest Brady
Start low
- If you have student loans, I would pay it at a right amount that you can handle. If it's 15k, pay $150 per month. The other money, use what you've learn in college and invest. If you invest correctly, by the 3rd-4th year you can make $2500 payments and it'll be done in no time without having to sacrifice your life style. Not traveling and not being able to spend after 8 hours of work day and 40hrs a week will likely lead you to drink a lot of alcohol. You need to release that stress. For me, starting with low payments, then using my savings or extra cash to invest, then finally making big payments made paying off the loans so much easier. Once it goes down to 8k, 6k, 4k it's just so much easier to get to the finish line. Good luck guys.
- —Guest Jake
Don't Pay off Faster.. (Part 2)
- If I Invest: About 1.4k in taxes on the investments, 700 tax deduction on interest. 700 still owed in taxes If I paid off the loans: 250 still owed in taxes on the investments, only 450 less than what is owed if I invested compared to the 2k less that I would obtain from my investments. Now, let's assume that I lost my check book and didn't get around to paying off my loan at the end of the year, planning to do it on Jan 2nd. Then on New Year's Eve, I'm killed by a hit and run drunk driver. (It happens.) If I only paid the interest, my heirs get $27k without ABSOLUTELY NO debt. Otherwise, my heirs will get a measly $15k. Which option looks better? You figure it out
- —Guest Jen
Don't Pay off Faster than You Have To!
- This frees up your money, and you have the opportunity to invest it and really begin to make money." WRONG! Let's say you have a $10k debt with a 7% interest and you suddenly win $10k at a casino. You can pay off the debt and write off 700 (or 7%) while still owing over 1k in taxes OR you can invest it agressively increasing the value to $12k before the end of the year, make the minimum required payment, write off the 700 on the nearly 2k you owe in taxes for the win, owe about 380 on your capital gains IF you sell your investments. Worse case scenario, you still owe 10k in student loans and your other account is worth 10.32k so you came out about $1320 ahead of where you would have been if you paid off the loans. 3rd part:" Even if you can deduct the majority of interest you are paying on your student loan, you should consider how much money you are losing each month because you have the payment. If you invest it in a mutual fund, you can be earning high interest rates on your inve
- —Guest Jen
Pay off the largest loans first.
- Make sure you understand your loans. Each time you take out a loan it is assigned a number. Make sure you understand your loans and pay off the largest loans first. Also, consolidate if you can and get get a lower interest rate on your loans.
- —Guest Pharmacist
BEING WISE AND HUMBLE AND WAIT ON GOD.
- I HAVE 65 COLLEGE CREDITS, AND I AM CONSIDERING OF GOING TO A TRADE SCHOOL IN PRACTICAL NURSING. I NEVER HAD A STUDENT LOAN AND I KEEP HEARING SO MANY BAD COMMENTS ABOUT THEM. HOWEVER, I WILL NOT ACCEPT A $12,000 STUDENT LOAN THAT WAS OFFERED TO ME.
- —Guest HELEN
Look at the facts
- I am currently working through professional school debt. I have all the debt of a homeowner but no assets. Looking back I see that I borrowed too much. They offer you too much money, and if you're like me, your eyes light up and sign the promissary note and live a little loftier than you should for a year. Live like a pauper during school - there's absolutely no shame in it. Interest rate. Look at this as anti-earning. If you have a interest rate of 5-7%(like me) to justify investing in anything, you need a return greater than your interest rate. If you're paying interest only, guess what, you're not paying your loans off! Interest only payments are what loan companies love. I graduated with close to 200k in debt. I'll have it paid off in less than 8 yrs. That's about 27 months of interest (only) payments I won't make - ~$40,000! Yes, I'm making it hard on myself now, but its a lifestyle I've gotten use to. I'm sure I'll get used to that $30,000 raise I get when my loans are paid!
- —hardlesson
Borrow sparingly, if at all
- I took out a small amount (less than $50. 00) to meet my grad. school tuition, and the payments are not only easy, but I'll most likely pay off the loan early. I started making payments earlier than I had to in order to lower the capital before the interest began to accrue. If I had it to do over, I'd have worked a second job to pick up the small amount I needed. Best not to have loans at all, if possible.
- —Guest Marie
Bite your tounge its worth it.
- I consider my self a lucky person when it comes to SL.. My grants covered near half of my education and now im one day away from paying off the remainder... But that did not come without suffering and some sacrifice. I took a 5,500 + interest loan and pushed myself to pay it off within a year. And i have no regrets. Great way to help is by monitoring your spending. Sacrifice food and things you want with what you need. Look at smoking, right there one can save 100-200 a month that could be used towards paying off your debts. Deciding to not go out for food will save you 50- 100 a month.. and these are just a couple examples. Just remember if you have the will to you can do it. Dont be intimidated take action and live happly .. student loan debt free!
- —Guest zero
Go to state school
- I went to a private school and graduated with ~50k in student debt (and I worked part time every semester so I could buy books etc). I'm working at good job now, but I pay nearly as much to my student loans as I do in rent each month. And it will be like this for the next 15 years unless I win the lottery or something. If I were to redo it, I'd have gone to a state school. My scholarships would have gone further so I would have taken out significantly less in loans. And even if I started out at a slightly lower salary, I would have more money to live on. Student loans are just another way the middle class is being crushed in America. There is an expectation you go to college, your parents make too much money to allow you to be eligible for any decent grants, so you take out a fortune in loans.
- —Guest Rachel
Pay Attention To Grants
- I wish I would have paid more attention to grants. One of my friends owes only 25% of what I owe because he got serious about grants and aid. Spend the time and look for aid!
- —Guest Darren
Gone to a school with dorm facilities.
- The main mistake I made was going to a school where there were no dorms. Instead, I had to live off-campus in an apartment. Had I went to a school with dorms and still worked as much as I did (28-40 hours a week on top of a full-time courseload), I could have use the money I was making to pay for my college tuition. I easily could have cut in half the $85,000 in loans I had to take out to pay for college. Now I'm stuck with $600 a month in student loan payments. Definitely NOT worth the stress of feeling like I'll never be able to invest in my financial future!
- —Guest Michael
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