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How to Pay Off a Big Student Loan #mortgage #loan


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This Millennial Paid Off $23,375 in Student Loans in Just 10 Months

“If you have a game plan, you can accomplish your goals,” says 22-year-old Jordan Arnold.

Like many millennials, Jordan Arnold graduated from college five figures deep in student debt. Unlike most of his peers, he paid off all of his loans less than a year after graduation.

Bluffton, Ind.

When he started paying it down: May 2013

When he became debt-free: March 2014

How I started building debt

I always knew I was going to go to college, though I figured I d go to community college for a year or two because it s cheap. But my parents started talking to me about this private Christian school, Indiana Wesleyan in Marion, Ind. I took a visit, and I really liked it. It s only like 3,000 students on campus, so it s a tight-knit community.

Tuition and room and board was about $31,000 a year. And the first year I hadn t applied for federal student aid, since I didn t commit to the college until about 10 days before classes started. I got some scholarships and a grant from my church, though. So, ultimately, I owed approximately $9,000 that first year.

Getting to $23,000

I could only borrow up to $5,500 in subsidized loans from the government each year, so I worked to cover the rest so that I didn t have to take out private loans. I also graduated in three years, which helped.

Still, altogether, I had to take out $15,150 in subsidized federal loans and $2,000 in unsubsidized federal loans. I borrowed another $6,000 from my parents.

My uh-oh moment

In the fall semester of my senior year, I remember being kind of nervous. I knew I had to start paying my debt within six months. It s stressful, when you don t have any money. And I heard all these stories about college students who get out of school, they have all this debt, and they can t find jobs.

Getting my debts paid off was important to me. I didn t want to get the point where I d have to be paying student loans for another 10 years. Right now, I m single. I don t have any dependents that rely on my income. But I didn t want to have these loans over my head when I m trying to feed a family and put a roof over their heads. It s not just about me, it s about my future family.

My first step out of the hole

Luckily, I got a job right out of college at an insurance agency (I had majored in finance). I was on salary, and it was pretty good: $36,000 plus bonuses.

I didn t have to pay my student loans for another four months, but over the summer I decided to go ahead and start making payments before interest began accruing.

I actually moved back in with my parents which is hard when you have been out on your own. But I didn t really have a reason to move out. And I was blessed that they actually preferred me to live there because I could help out around the farm they own, baling hay or feeding the horses. Living at my parents place for free was a lot better than having to pay $400 or $500 a month for rent.

Kicking it into gear

About four months into my new job, I picked up a second job, delivering for Pizza Hut, to help pay off my debt. I would start work at the insurance agency at 8:30 a.m. change in the bathroom at 4:50 p.m. get to Pizza Hut by 5, deliver pizzas until about 9:30, get home around 10, then shower, eat, and go to bed.

My monthly take-home pay from the insurance company was about $2,200, and I made about $1,000 at Pizza Hut. After gas, car insurance, tithing to my church, entertainment and food, I could put about $2,000 towards my debt every month.

At that rate, I was projected to pay off my debt in May 2014. But I got a $3,000 refund on my taxes, and paid off the rest of my debt with that.

How I celebrated being debt-free

I made my last payment the first of March, then I went to Florida with some friends two weeks later. It was pretty rewarding after a 10-month battle. I had probably worked 65 to 70 hours a week for seven or eight months. It was exhausting, but it was worth it.

What I d tell someone else in my place

If you have a game plan, you can accomplish your goals. I have an account on Mint.com, that s where I kept my budget. That s a big part of it just seeing your progress and knowing you re getting closer.

Also, have an emergency fund. While I was paying off that debt, I had a small car accident. I was delivering a pizza, and I hit something in someone s driveway. It cost me about $760 to fix the car. But I had a $1,000 emergency fund, which was kind of a buffer that I kept because life happens.

Finally, don t be afraid to move home if you have to. That was a big part of how I got out of debt.

My plan for the future

I quit my Pizza Hut job in April after paying off my debt, and now work at a bank analyzing commercial and agricultural loans, which is more in line with what I wanted to do.

I actually haven t moved out of my parents house yet. Instead I m saving up for a down payment on a house. I m putting away 50% of my take-home income for that, and I should have a down payment by mid-summer. I also started investing. I started a Roth IRA, and I plan to max it out this year.

Staying true to myself

Some people have made the argument, Maybe you shouldn t have paid off the debt so fast because the interest rate is cheaper than what it will be for you to borrow for a home.

That makes sense in my head, but in my heart, I didn t want this hanging over me. I want to be responsible with my money and build a strong foundation.

Check out Money 101 for more resources:

  • I am unable to pay my debts. What can I do?
  • How do I get rid of my credit card debt?
  • How can I improve my credit score?
  • How do I set a budget I can stick to?

5 Ways to Pay Off Your Student Loans Faster #pension #loan


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5 Ways to Pay Off Your Student Loans Faster

The first thing people say when they find out where I work: “Can you delete my student loans for me?”

If only I had that power. Just like many of you, I am a student loan borrower. Each month, my federal student loan servicer. withdraws my $381.35 student loan payment from my bank account and I still cringe every time. (Do you know how many pairs of shoes I could buy with that money?) Point is, I understand what you’re going through.

That said, there are manageable ways to pay off your student loans faster than you had planned and save yourself money by doing so!

Here are some ideas:

  1. Pay Right Away Even though you’re usually not required to. consider making student loan payments during your grace period or while you’re still in school. If you’re short on cash, consider at least paying enough each month to cover the amount of interest you’re accruing. That way your interest doesn’t capitalize and get added to your principal balance. Not doing this was one of the biggest mistakes I made with my student loans.
  2. Sign up for Automatic Debit If you sign up for automatic debit, your student loan servicer will automatically deduct your student loan payment from your bank account each month. Not only does this help ensure that you make payments on time, but you may also be able to get an interest rate deduction for enrolling. Contact your loan servicer to see if your loan is eligible for this benefit.
  3. Pay More than Your Minimum Payment Even if it’s $5 a month!  Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. If you want to ensure that your loan is paid off faster, make sure you tell your loan servicer that the extra amount you’re paying is not intended to be put toward future payments. If given the option, ask your servicer if the additional payment amount can be allocated to your higher interest loans first.
  4. Use Your Tax Refund One easy way to pay off your loan faster is to dedicate your tax refund to paying off some of your student loan debt. Part of the reason you may have gotten a refund in the first place is because you get a tax deduction for paying student loan interest. Might as well be smart about the way you spend it.
  5. Seek Out Forgiveness and Repayment Options There are a number of situations under which you can have your federal student loan balance forgiven. There are forgiveness and repayment programs for teachers. public servants. members of the United States Armed Forces. and more. Most of these programs have very specific eligibility requirements, but if you think you might qualify, you should definitely do some research. Also, research whether your employer offers repayment assistance for employees with student loans. There are many who do!

Nicole Callahan is a Digital Engagement Strategist at The U.S. Department of Education’s office of Federal Student Aid. She is scheduled to finish repaying her student loans in 2021, but is hoping that by taking her own advice, she will finish much faster.


Improve Cash Flow By Paying Off Low Interest Debts – The Simple Dollar #commercial #loan #rates


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Improve Cash Flow By Paying Off Low Interest Debts

Quite often, when I write answers to reader mailbag questions, I encourage people to keep pushing hard against their debts no matter the interest rate. Almost everyone agrees that it makes sense to rapidly pay off the 15% debts, but I ll often get a lot of disagreement about the 3% debts. People will often ask why they should hurry to pay off a 3% debt. After all, they can get a better return in other investments.

The reason is simple. It s all about the cash flow .

What is Cash Flow?

Let s start off with the basics and explain what cash flow is. Cash flow refers to the amount of income you take in minus the required bills you have to pay. Ideally, you have money left over at the end of this process, and the more cash you have left over, the better. That cash can be saved for the future, invested, or applied to extra debt payments.

Let s say, for example, that you re bringing home $3,500 a month. You have a $1,000 mortgage at 6.75%, a $500 student loan payment at 3%, and another $1,000 in required bills (electricity, food, fuel, etc.). At this point, you must have $2,500 in monthly income to pay for your minimum required bills. At the end of the month, with a $3,500 income, you re left with $1,000 to do with what you please.

Now, let s look at your situation if the mortgage is paid off. You still has a $500 student loan payment and another $1,000 in required bills. You must have $1,500 in monthly income to pay for your minimum required bills. At the end of the month, with a $3,500 income, you re left with $2,000 to do with what you please.

Because your mortgage is paid off, your monthly cash flow is far better than before. This helps you in countless ways.

Let s say you lose your job and can only find one that gives you a 40% pay cut. At this point, you re bringing home only $2,300 a month. In the first scenario, you have $2,500 in required bills. You re going to have to make some major scary cuts in your life in order to make ends meet. In the second scenario, you have only $1,500 in required bills. You ll be just fine and still have a surplus.

There are countless other examples of life changes, planned or otherwise, that can significantly alter your income. The greater the amount of required bills each month, the more difficult it is to swallow those life changes.

This is why it s nearly always useful to improve your cash flow. Improving your cash flow improves your life options. It makes job transitions far less painful, for one. When you re fired or downsized, you can take a lower paying job without pain. On the other hand, you also have a lot more flexibility with your career choices as you re able to take a lower-paying but more career-building job. In fact, this is exactly what I did: I paid off a lot of debts, which reduced my monthly required payments and made it easier for me to live on less income, which enabled me to switch to writing The Simple Dollar full time because my cash flow was in much better shape.

The worse your cash flow situation is, the more you re tied to your current job. It gives your boss more power and you less power because the threat of losing your job is devastating. Your job becomes more stressful by default because the always-present threat of losing that job and the pain it would cause is always hanging over your head. Your career options are limited, too, because you can t deal with a reduction in pay.

In short, pinching your cash flow pinches your options.

Debt pinches your cash flow, of course. For example, getting a car loan pinches your cash flow because you re now responsible for those payments. On the other hand, living without a car loan for a while and saving up for your next car is a much better cash flow option, as it allows you to simply pay cash for the next car, keeping your cash flow as wide as possible.

Overspending pinches your cash flow, too. If you needlessly spend a lot of money, you ve pinched your cash flow for that month. You take money away from your savings. Thus, at a later point when you need that cash for a purchase, you re forced to rely on debt, which forcibly pinches your cash flow.

It s because of these things that I usually encourage people to just get rid of all of their debt. Eliminating all of your debt opens that cash flow up, making it easy to save for the future, change to a different job, or make other significant life changes that would be nearly impossible with a constant debt payment hanging around your neck.


How to Pay Off a Big Student Loan #calculate #auto #loan


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This Millennial Paid Off $23,375 in Student Loans in Just 10 Months

“If you have a game plan, you can accomplish your goals,” says 22-year-old Jordan Arnold.

Like many millennials, Jordan Arnold graduated from college five figures deep in student debt. Unlike most of his peers, he paid off all of his loans less than a year after graduation.

Bluffton, Ind.

When he started paying it down: May 2013

When he became debt-free: March 2014

How I started building debt

I always knew I was going to go to college, though I figured I d go to community college for a year or two because it s cheap. But my parents started talking to me about this private Christian school, Indiana Wesleyan in Marion, Ind. I took a visit, and I really liked it. It s only like 3,000 students on campus, so it s a tight-knit community.

Tuition and room and board was about $31,000 a year. And the first year I hadn t applied for federal student aid, since I didn t commit to the college until about 10 days before classes started. I got some scholarships and a grant from my church, though. So, ultimately, I owed approximately $9,000 that first year.

Getting to $23,000

I could only borrow up to $5,500 in subsidized loans from the government each year, so I worked to cover the rest so that I didn t have to take out private loans. I also graduated in three years, which helped.

Still, altogether, I had to take out $15,150 in subsidized federal loans and $2,000 in unsubsidized federal loans. I borrowed another $6,000 from my parents.

My uh-oh moment

In the fall semester of my senior year, I remember being kind of nervous. I knew I had to start paying my debt within six months. It s stressful, when you don t have any money. And I heard all these stories about college students who get out of school, they have all this debt, and they can t find jobs.

Getting my debts paid off was important to me. I didn t want to get the point where I d have to be paying student loans for another 10 years. Right now, I m single. I don t have any dependents that rely on my income. But I didn t want to have these loans over my head when I m trying to feed a family and put a roof over their heads. It s not just about me, it s about my future family.

My first step out of the hole

Luckily, I got a job right out of college at an insurance agency (I had majored in finance). I was on salary, and it was pretty good: $36,000 plus bonuses.

I didn t have to pay my student loans for another four months, but over the summer I decided to go ahead and start making payments before interest began accruing.

I actually moved back in with my parents which is hard when you have been out on your own. But I didn t really have a reason to move out. And I was blessed that they actually preferred me to live there because I could help out around the farm they own, baling hay or feeding the horses. Living at my parents place for free was a lot better than having to pay $400 or $500 a month for rent.

Kicking it into gear

About four months into my new job, I picked up a second job, delivering for Pizza Hut, to help pay off my debt. I would start work at the insurance agency at 8:30 a.m. change in the bathroom at 4:50 p.m. get to Pizza Hut by 5, deliver pizzas until about 9:30, get home around 10, then shower, eat, and go to bed.

My monthly take-home pay from the insurance company was about $2,200, and I made about $1,000 at Pizza Hut. After gas, car insurance, tithing to my church, entertainment and food, I could put about $2,000 towards my debt every month.

At that rate, I was projected to pay off my debt in May 2014. But I got a $3,000 refund on my taxes, and paid off the rest of my debt with that.

How I celebrated being debt-free

I made my last payment the first of March, then I went to Florida with some friends two weeks later. It was pretty rewarding after a 10-month battle. I had probably worked 65 to 70 hours a week for seven or eight months. It was exhausting, but it was worth it.

What I d tell someone else in my place

If you have a game plan, you can accomplish your goals. I have an account on Mint.com, that s where I kept my budget. That s a big part of it just seeing your progress and knowing you re getting closer.

Also, have an emergency fund. While I was paying off that debt, I had a small car accident. I was delivering a pizza, and I hit something in someone s driveway. It cost me about $760 to fix the car. But I had a $1,000 emergency fund, which was kind of a buffer that I kept because life happens.

Finally, don t be afraid to move home if you have to. That was a big part of how I got out of debt.

My plan for the future

I quit my Pizza Hut job in April after paying off my debt, and now work at a bank analyzing commercial and agricultural loans, which is more in line with what I wanted to do.

I actually haven t moved out of my parents house yet. Instead I m saving up for a down payment on a house. I m putting away 50% of my take-home income for that, and I should have a down payment by mid-summer. I also started investing. I started a Roth IRA, and I plan to max it out this year.

Staying true to myself

Some people have made the argument, Maybe you shouldn t have paid off the debt so fast because the interest rate is cheaper than what it will be for you to borrow for a home.

That makes sense in my head, but in my heart, I didn t want this hanging over me. I want to be responsible with my money and build a strong foundation.

Check out Money 101 for more resources:

  • I am unable to pay my debts. What can I do?
  • How do I get rid of my credit card debt?
  • How can I improve my credit score?
  • How do I set a budget I can stick to?

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How can I pay off my credit card debt? 360 Degrees of Financial Literacy #personal #loan #pay #off #credit #card #debt


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How can I pay off my credit card debt?

Certainly the best way to pay off your credit card debt is with a single payment. If you can find the money to pay off all your credit card debt, you’ll get back on solid financial ground quickly and without paying additional interest.

The next-best method is to pay off the card with the highest interest rate first. You’ll want to pay as much as you can to that account and then send the minimum payment due to each of the other accounts. When you’ve paid off one card, start paying on the card with the next highest interest rate. Focusing on one card at a time gives you clear financial goals, minimizes your interest expense, and creates a sense of satisfaction.

If available, you can use a home equity loan to pay off credit card debt. The interest on home equity loans is typically lower than credit card rates and is usually tax deductible. This can be an effective repayment method if you can handle it with discipline. However, these loans can be as easy to abuse as credit cards, particularly if you have a line of credit. Also, you run the risk of paying down the home equity loan at the same time you’re running up more debt on your newly cleared credit cards. Remember, your home equity loan, unlike credit cards, will be secured by a lien on your home. If you can’t make your payments, you’ll be in default, and the lender can foreclose on your home.

A less aggressive way to pay off your debt is to transfer your balances to lower-rate accounts. Known as credit card surfing, this method works until you run out of lower-interest opportunities. However, it does allow you to reduce interest fees and pay more against your existing balance.

It’s always best to control new spending and pay more than the required minimum payment whenever possible. Invariably, these cover little more than the finance charges. You continue to carry the bulk of your balance forward for many years without actually reducing that balance. Ideally, charging only what you can afford to pay off each month gives you the best benefits of a credit card and few of the drawbacks.


Getting Your Name Off A Cosigned Loan #unsecured #debt


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Getting Your Name Off A Cosigned Loan

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When you cosign any form of loan or line of credit. you are liable for the amount of money borrowed. This may impact your ability to borrow money for yourself because a lender for a larger loan, such as vehicle and home loans, will include the amount of the loan you cosigned on as part of your debt load when calculating your debt-to-income ratio .

Plus, the payment history on the cosigned loan or line of credit is reported on both the borrower and cosigner’s credit reports. If you’ve agreed to cosign a loan for a friend or relative, but no longer want the responsibility of shared credit, how do you get your name off the loan? Fortunately, there are five key ways to do this.

1. Refinancing

With a loan with a larger balance, refinancing the loan under the person who is benefiting from the money is the best option. This rule applies to most loan types, such as personal loans, car loans, private student loans and mortgages.

Loans with larger balances are harder to pay off within a few months, so refinancing may allow the borrower to reduce the amount of his or her monthly payments. The person will also be borrowing a lower amount, assuming that a significant portion of the loan has been repaid, which can mean that he or she will be able to secure the loan without a cosigner.

You can also use a version of this strategy with credit cards by transferring balances to a new card under the person’s name for whom you cosigned. Let’s say the credit card that’s under both of your names has a $1,000 balance. If your friend or relative can get approved for a card for more than $1,000, the money can be transferred. Then, both of you can decide to close the current credit card. This strategy, however, works mainly for smaller amounts of money.

Improve the Credit Rating of the Person Using the Money

Options are pretty slim if the person you cosigned for has not-so-great or minimal credit history. Help the person improve their credit with these five steps.

  1. Pull Credit Reports

Annualcreditreport.com allows individuals to pull their credit with all three credit bureaus once a year for free. Your friend or relative can purchase either the FICO score from TransUnion or Equifax at myfico.com. This will tell you what their starting point is. Plus, there’s an explanation of what factors are causing a lower score. Once the person you cosigned for improves his or her score, they may be able to hold the loan on their own. (For more on the latest version of FICO scoring, checkout New Credit Scoring Forgives Small Debt .)

  • Evaluate What Problems are Impacting Your Friend’s or Relative’s Credit Rating
    Are there a lot of late pays on loans or credit cards? Are credit card balances above 50% of the available credit limit? Does the person have recent run-ins with collections? Are there accounts that should be reported in good standing that show a late pay or went into collections for non-payment? If yes, these need to be rectified in order to improve the score. (See How To Dispute Errors On Your Credit Report .)
  • Focus on One or Two Issues That Are Currently Hurting Their Score
    It could be to pay all bills on time for six months and dispute misreported information. If the person’s credit history is comprised only of the loan on which you cosigned – and it isn’t an outstanding credit card payment – then they need to open one credit card, keep the balance under 15% of the credit limit and pay on time. How revolving debt, such as credit cards is managed, is a large chunk of credit scoring. Therefore, the above strategy should improve the person’s ability to obtain credit.
  • Develop a Plan With a Time Frame
    If the only problem is misreported information, credit report disputes can be solved in two months. Other actions should be given six months in order to make a noticeable impact on credit rating.
  • Check FICO Score Again
  • Pay Off the Loan Faster

    Another option for getting out of a cosigned loan is to ask the person using the money to make extra payments to pay off the loan faster. You may want to chip in on the balance so you can end the credit burden on your account.

    Chipping in makes senses in two circumstances:

    • If the balance is a small amount that you can afford to pay, and a late payment or non-payment has been or is expected.
    • You are planning to buy a home or vehicle in the near future and cannot afford a ding on your credit score.

    Close Account

    With certain types of loans, the best way to remove the person is to close the account. This is best when you are a joint account holder on a credit card or line of credit. If there is a remaining balance, it will have to be paid off or transferred first. Apartment leases can also be closed and reopened at the end of the lease under the person occupying the apartment.

    If you or the other person is an authorized user instead of a joint account holder on a credit card or other line of credit, the authorized user can be removed at the primary account holder’s request.

    Conclusion


    Tip #1: Seven Smart Ways to Pay Off Student Loans Fast #cheapest #home #loan


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    Tip #1: Seven Smart Ways to Pay Off Student Loans Fast

    Last Updated 24th September, 2014

    Nearly two-thirds of graduates of four-year colleges and universities have college loans to repay. The national average of student loan debt for these graduates is more than $20,000, according to a survey by The Project on Student Debt.

    There are several different strategies and approaches student loan borrowers can take to get those loans paid off fast. During the next 7 days I will present Seven Smart Ways to Pay off Student Loans Fast, with a new tip each day. Here is Tip #1:

    Tip #1. Pick the shortest loan repayment program you can afford.

    If you have federal student loans, there are four different loan repayment plans you can select:

    • the standard loan repayment plan, where you pay a minimum of $50 a month and your payments last for as long as 10 years;
    • the extended repayment option, which also requires at least $50 monthly payments, but which lets you pay off your educational loans over 12 to 30 years;
    • the graduated repayment program, which lasts from 12 to 30 years and allows you to pay as little as $25 a month; and
    • the income-contingent repayment plan, which permits you to make payments as low as $5 a month and which lasts for 25 years.

    Bonus Tip: Don’t make the mistake of just picking the option that lets you pay the smallest monthly payment. That may help your cash flow in the short term, but in the long run you’ll pay thousands more in finance charges.

    The best strategy: Pay as much as you can possibly afford on your student loans. If you can’t swing the standard repayment plan (with a 10-year payoff), and you have to choose a longer repayment plan, then at least make extra payments on top of your normal monthly payment.

    Next Step: Even if you can only afford to throw an additional $25 or $50 a month on top of your regular payment, every little bit will help. Sending in “extra” payments is a short-term financial challenge, but if you go ahead and bite the bullet now, making sacrifices in the near-run, you’ll be much better off in the long haul. Next Tip


    Strategies For Paying Off Your Student Loan Debt Fast #instant #loans


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    Strategies For Paying Off Your Student Loan Debt Fast

    O n a recent Money Mastermind Show we had on an interesting guest, Zina Kumok of debtfreeafterthree.com .  Zina s claim to fame is paying off $28,000 worth of student loans within 3 years of graduating college.

    On the show we discussed quite a few topics surrounding student loan debt, including just how accepted it is these days to take on a mountain of student debt and how too many students go to school without a plan for their future career or how to pay off their student loans.

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    I think we all agreed on the show that how you pay off your student loans is a pretty personal decision based both off of math and psychology.  For Zina, she wanted to pay off her loans as fast as possible, to get rid of the near 7% interest loans she had taken out. Miranda Marquit. a regular on the show and a contributor to this site, was on the other end of the spectrum. Her loans were sub 2% in interest, and she plans on paying the minimums until it s paid off investing her extra money instead.

    Today I thought it might be interesting to take a look at some facts surrounding student debt, talk about the pros and cons of paying off your student loans as fast as you can, and then look at what some of the options that people have when it comes to their student debt.

    Student Loan Facts Figures

    Student debt has been growing over the years, faster than the  inflation rate. According to the economist, since 1983 college costs have risen at a pace almost five times the rate of inflation .

    ..the cost of university per student has risen by almost five times the rate of inflation since 1983, and graduate salaries have been flat for much of the past decade. Student debt has grown so large that it stops many young people from buying houses, starting businesses or having children.

    Not only has the cost of college risen, but more people are having a hard time keeping current on their student loans, in part because graduate salaries have been so stagnant.

    The Project on Student Debt, a non-profit, says that 15% of borrowers default within three years of entering repayment. At for-profit colleges the rate is 22%. (source )

    Here are a few more factoids about student loans and student debt.

    • Costs to attend college have more than doubled in the past decade.
    • Average debt of 2014 U.S. four-year grad $33,000.
    • Average debt of 2014 Canada four year grad. $26,000
    • According to the College Board, 4 years of tuition and fees at a private college will cost about $129,700. In 18 years it will be around $312,200.
    • Tuition and fees at a public university (in-state resident) currently costs about $38,300. In 18 years it will be closer to $92,200 (source ).
    • A Discover Loans study found that 47% of parents said that their kids should pay part of their own way. Some said their child should be solely responsible for  paying for school (15%), while other said their kids should foot most of the bill (32%) for their college education.

    College costs more than ever, and on top of that more parents are saying that their kids should have at least some part in paying for their own education. Since most students aren t independently wealthy, that means that many are having to pursue alternate methods of financing their education including scholarships, grants and (shudder) student loans.

    Should You Pay Off  Your Student Loans?

    When you talk about whether or not you should pay off your student loans, people usually come down in one of two camps. Yes, you should pay them off quickly or no you should take your time . Some things to consider when deciding whether or not to pay off your loans:

    • Interest rate. If your loan as an extremely high interest rate, you re likely better off doing your best to pay it of fast as quickly as you can.
    • Opportunity cost. What is the opportunity cost of not investing when you re younger?  Are you missing out on compound returns you might otherwise have had by investing earlier?
    • Personal debt tolerance. Are you allergic to debt like me? Or are you OK with carrying some low interest student loan debt?
    • Psychological boost given by paying it off. Many people will get a psychological

    Yes you should pay them off quickly

    Those in favor of paying off the loans argue that any debt is dragging you down and holding you back, even if the interest rate isn t that high. It s a constant weight on your shoulders and a psychological drain. You re better off paying it off as quickly as you can so that you can feel the freedom of not having that debt anymore.

    No, you should pay the loans off over time

    Those in favor of just paying the minimums on student loans often argue that it s the lowest interest debt you re likely to have, and you can probably make more in the stock market by investing.  Pay the minimums, and invest the rest.  If you have a higher tolerance for carrying debt than others, it might be something to consider.

    Get Your Finances In Order Before While You re In School

    For me, the idea of taking out a ton of student loans is abhorent, and I think most people would be best served by planning out their future at least to some degree before they go to school.

    Have a plan before you go to school

    Think about what you want to do for a career, and choose a school, major and cost that is suitable.  If you re getting a liberal arts degree like I did, you don t need to go to an ivy league school. Just go to an in state school with lower tuition.  If you re going to school for a STEM degree you may want to consider a better school, but still remember to do your research and find the best school for your money. The most expensive school is not always the best.

    Have a budget and don t overspend when you re in school

    Once you re in school, you d be best served by making sure you have your finances in order. Most students are not keeping a budget and tend to overspend when it comes to discretionary spending (40% of student income goes to discretionary items such as entertainment, apparel, services, travel, vacation).  The result is they take out too many loans and spend too much money that they ll have a hard time paying back once they graduate and find the job market is tougher than they thought.

    Here are some things you can do when you re in school.

    • Get a basic no-fee checking and savings account .
    • Figure out how to do a budget .
    • Track your income and expenses when you first start school. (YNAB4 budget software is free for students! )
    • Figure out how much you’ll need for the basics. Set aside a little for fun. Don t allow yourself to go overboard.
    • Don t overspend and do your best not spend extra loan money if you have it.

    Strategies For Getting Rid Of Student Loan Debt

    So what are some things you can do to get rid of your student loans as fast as you can?

    • Take extra money and put it towards debt payoff. If you get extra windfalls of unexpected money like a bonus or a tax refund.
    • Get a short term part time job to help pay it off. If you re extremely motivated to pay off a loan, you might consider getting a part time job on the weekends or evenings, and putting the money towards debt payoff. Or start a blog!
    • Make it a line item in your budget: Make debt payoff a line item in your budget, and budget for an amount that is larger than the minimum payment, even if only a little bit larger.
    • Make it a game. Turn paying off your student loans into a game, trying to figure out when you ll pay it off, finding ways to get extra money to put towards the debt and then having a reward once you finally do pay it off.
    • Consolidate loans. If you have multiple loans you might want to consider consolidating your loans, especially if you can get a lower rate on all of the loans.  Be wary of just wrapping all the loans up into one for convenience, however, if they don t all have a lower rate afterwards.
    • Loan forgiveness programs. If you meet the qualifications for certain programs you can have portions of your student loans forgiven .  For example, one program for teachers will forgive up to $17,500 in loans if they teach at certain schools for a full 5 years.

    Be creative and you ll find ways to make the loan payoff happen sooner!

    Have your own strategies for paying off student loans?  Tell us what they are in the comments.


    Should You Pay Off Student Loans when Refinancing Your Home? #i #need #a #loan #today


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    Should You Pay Off Student Loans when Refinancing Your Home?

    Refinancing your home gives you the ability to do a lot of different things financially. Much of the time, you will be in better shape if you pay off other loans with your refinance money. One type of loan that is very common is student loans. Many people would love to get rid of these loans all together. However, paying them off with your refinance may not be to your advantage. Here are a few things to think about before you pay off your student loans with refinance money.

    Interest Rate

    Student loan interest rates are usually one of the lowest interest rates around. The interest rates that are given out on student loans will usually be lower than any other type of loan you could get. With a home refinance, your interest rate in most cases will be higher than the rate you were paying for you student loans. While you may like the thought of having all of your debt in one place, it can cost you a lot of money over the life of your loan if you pay a higher interest rate than you need to.

    Most of the time, your student loans are designed to be a shorter loan than your mortgage. When you lump your student loans into a mortgage, you are essentially going to be paying them off over the course of 30 years. Spreading out your loan, means that you will be paying for them much longer than you should have to. When you throw in the higher interest rate, you could end up paying much more for this education than you thought.

    No Tax Advantage

    Most of the time a refinance is a great time to take advantage of tax law. Your mortgage interest is tax-deductible which can save you a large amount of money each year. Therefore, it is common practice to throw in other types of loans into the mortgage to gain tax-deductible status. However, with a student loan, you are not gaining this advantage. Student loan interest is already tax-deductible according to current tax law. Therefore, you can already deduct the interest that you pay on your student loans. You are trading one tax-deductible form of interest for another.

    Flexibility

    With a student loan, you have a lot of flexibility. For example, with most student loans, you can get what is called a forbearance. If you come across hard economic times and cannot afford to pay your student loans, you can call the company and get a forbearance. This means that you can essentially put your payments on hold while you get back on your feet. The interest still accumulates, but the payments will be stopped. With a mortgage, you do not have this ability in most circumstances. If you miss your payments with a mortgage, your house will go into default and it may be foreclosed upon. Therefore, trading a flexible form of loan for a non-flexible one may not be in your best interest.