College is extremely expensive! But, we go anyway because we want to get a degree to get a good job.
One part of college we all purposely ignore are student loans.
Its called debt, and we don’t want to think about it.
Debt is not something we want, but many college students graduate with hundreds of thousands of dollars in student debt. We almost begin to ignore debt; we make it this minuscule thing we put in the back of our minds. While in college, we completely wash out the idea of college loans because it seems like a distant trouble. Then after, it hits us,and we still pay it very little mind. People begin to adopt the idea that we are suppose to be in debt, and it is okay to have college debt reigning over our heads until we’re 40 because that’s normal.
How To Get Rid Of College Loans
Well I say, Absolutely NOT.
I will not devote the rest of my life to paying an institution all of my hard earned money, and pay them even more than I bargained for because of interest. Yes, interest. Lenders use interest rates as an annual fee of the percentage of money borrowed. Usually, interest rates are around 3%-6%. The day you take out your first college loan, the interest rates begin. Interest rates on unsubsidized loans or private loans are the responsibility of the student to pay throughout the four years, while interest rates on subsidized loans are paid by the federal government while we are in school. However, you are responsible for the interest payments after graduation. Loans usually have a grace period, which is a set period of time after you graduate or leave school before you must begin to repay your loans. The grace period is suppose to be time to get financially settled, and form a repayment plan. Many plans have a 6 month grace period, which is not very long, but some loans do not have a grace period. Check if your loans have a grace period or not! Interest means in the long run you pay even more to an institution and the government than just the money you took out for loans. Once, your grace period is over; you have to start paying your loans back. If you miss a payment, your credit will be damaged, which affects your ability to borrow any money in the future.
This past Tuesday, an article was published in the Daily News that student debt for New Yorkers has doubled in the last 10 years. In turn, young people have trouble buying homes or saving for future endeavors.
This is insane. So, we work hard to get an education, to be paying for it for the rest of our lives? And then, we cannot move further in life because we are paying back these loans? How can we own a home or start a business if we are so much in debt? Failing to pay back debt on time can affect your credit, which hurts your credit score. This may hurt your chances of borrowing money in the future to buy a home or a car.
My solution to this problem is preparation.
Most of us will have student loans, but our future financial independence and stability depends on how we look at student loans. College students need to start paying off student loans before we even finish school. I know, that seems crazy. It may not be a priority to you right now, but I am saying you need to make it a priority. We should look to pay off our loans as soon as possible rather than delaying and allowing thousands of dollars of interest to accumulate.
Every month college students should put away money to put towards their college loans. Set goals for yourself. You can start small and save $50 a month or even a $100 a month, and by the end of the year, you can try to put at least 1k towards your loans. Or try to pay at least 5k in school before you graduate. This might mean less shopping or eating out, but at least you can ensure an earlier financial freedom. I don’t know about you, but this is important to me. To make my money work for me as soon as possible. I don’t want to be in debt forever because eventually I want my net worth to be positive. (As long as you have debt your net worth will probably be negative) We have more important things to do with our money.
Want more ways to save money each month? Read my 8 ways to save in college. Read here…
I too wish I started to think like this earlier. I thought it was something to think about in the distant future; until, I heard a lady over the summer say in three years her student loans tripped from 80k to 110k because of interest. Immediately, I knew it was time to figure out a plan. That is 30k that could go into a home or business investment. I will not go though that, nor should anyone want to go through that. I am still going to be paying loans post graduation, but starting now makes a difference.
Make it a priority. Have a plan. Start now!