Lose the Student Loan Ball and Chain

The average college grad in 2012 graduated with $26,600 in student loan debt! That’s one hell of a graduation gift.

Here are 3 tips to fight the pain:

1. Pay the most expensive first: if you have multiple loans with different rates, pay off the loan with the highest rate first. It’s important to manage the effects of compounding interest. By paying off the highest rate first, you can limit the total amount of interest that you have to pay over the life of the loan.

2. Pay as much as you can: by only paying $150/month it would take you over 36 years to pay back $26,600 in debt and you’d pay a total of $38,886 in interest alone! By increasing your payment to $400 you could pay the same loan back in less than 7 years and pay under $6,000 in interest. Paying a little more now makes a huge difference down the road.

3. Know you options: if you are struggling to pay, don’t give up. You have options. For federal loans you may have the option of an Income-Based Repayment Plan that can reduce monthly payments to help make loan debt manageable. There are also programs where public service workers (i.e. teachers, police) can have debt forgiven after 10 years.

The bottom line is that you have to make it a priority. By eating out and shopping a little less, and paying a little more on your student loans, you can dramatically decrease the length of time and amount of interest it takes to pay them back.

Grappling with specific questions? Email us.

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Comments

  1. Spot on with this write-up, I truly think this website needs far more consideration. I’ll probably be once more to read far more, thanks for that info.

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  1. […] no secret that the cost of a college degree is getting pretty ridiculous. Four years at Harvard, Stanford, Michigan or any top ranked school […]

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