Paying off Your Student Loans

by J. Riggs
(Columbia, CA USA)

Pay It Off!

Whew! You made it, you have your degree. Congratulations! Now comes the hard part (yes, harder than getting the degree), striking out on your own and finding a job, and oh yeah, paying off your student loans . I’d like to say loan, but in order for my son to finish his degree at the Culinary Institute of America, Hyde Park, he had to take out three loans. The total: $65,000.00. Yes, an almost surreal amount of money, isn’t it? But so worth it. We are proud of our son. He had obstacles to overcome, but he persevered, he was dedicated, and he never wavered from his goal. We have a chef in the family!

Now, time to get back to “the pay off.” We definitely learned all about negotiating the labyrinth of scholarships, grants and loan applications, public and private financial aid programs, and college aid packages. Now that our son has graduated, we can honestly say there is one word that distinguishes those people who pay back their student loans in a timely and relatively pain free manner, and those people who seem to pay forever: preparation. So, here are some important things you should consider before the loan officer starts making calls twice a day.

The year (yes, I mean a full year) before graduation, start sending out resumes. Be flexible in your job search, it is more important to get out of debt sooner rather than later, and if that means taking employment in a company that initially was on your “B” list, not your “A” list, don’t get sweaty about it, be pragmatic. You will land the job of your dreams, in time. However, the first thing to do is get a handle on your debt by paying off your student loans in order to get out of debt fast and get that cash flow going. Remember to network, find job search websites, connect to LinkedIn, and set up your vita with them. Also, if you have a Stafford Guaranteed Federal Student Loan, you can, under certain circumstances, obtain a postponement of the date when you have to start paying it back.

Try to get ahead of the interest on your loan. ALWAYS pay more than the minimum due each month, it really is amazing how that shrinks the total loan amount. Even if you have your student loans for years, by proving that you are serious about paying them in a timely and responsible manner, your credit rating will reflect that. As surprising as it might sound, handled correctly, even debt can help you with other major purchases like that new car you’ve had your eye on. Again, congratulations and good luck!

Read more advice on from other students and parents at Paying off your Student Loans

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Comment from your friendly team at College Financial Aid Advice
Thank you J. Riggs for sharing your son’s experience and offering some excellent advice to students. Student loans are a big responsibility and learning to pay the loans off as soon as possible is important to get out of the debt cycle. Good luck.

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Pay off Student Loans

by Heather
(Utah)

As I graduated at 20 years old with my Bachelor's in Science in Computer Science, I now realized I was on my own... with $90,000 in student loans. At first, I was overwhelmed and thinking 'What did I just do? I have doomed myself into a spiral of financial insecurity!'. Well, that's not entirely true. I graduated in 2008. I took out a 30-yr payoff plan to pay off the student loans . No, I have not paid them off in 4 years! However, my husband (Also has $75,000 in student loans) and I have a plan. We both make good money, and we are focusing on one thing at a time. I have 6 loans with the total of $90,000. I have made the minimum payment until I could afford to pay more on them. I still make the minimum payment, but now, I put $400/month extra on one particular loan-principal payments only. Now, keep in mind, I couldn't always do this.

When I graduated, I bombed my first job-too advanced placement for me at the time. I was then unemployed for 3 months. After some job searching, nothing was coming up. I decided to broaden my horizons. I worked at low-income retail jobs and was doing on the side contracting in my profession. I did this until mid-2009, until I found a more stable-though not preferable-position. I was working in support-higher salary than what I was making, though not by much. We struggled for a while. My husband got raise after raise, while my company didn't seem to recognize me. I continued like this for 2 years. Finally, I was fired with no reason behind it. We won't get into how this wasn't fair, but I did get a severance package and unemployment.

A week later, I found my current job. I have been working there over a year, and doubled my salary-in a position I actually am qualified for. So, since we have been able to stay on our feet, we have been able to pay down some on the loans. With every bonus we receive, and every check we get from family, it goes to pay off some more loans. I have followed this plan for over a year now, and I am proud to say I owe around $65,000 on my loans to this day. Which means-it is not impossible, but it does take a lot of commitment.

You have to realize you cannot get everything you want. Deal with the torn up couch for a little while longer, or the junker you have been driving. In the end, paying off your student loans will all be worth it. And people who do make fun of what you have...well, they will be the ones paying for 30 years to pay off their loans. Know you are doing the right thing.

Read more advice on from other students and parents at Pay off Student Loans

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Comment from your friendly team at College Financial Aid Advice

Thank you Heather for sharing your story and some good tips on how to pay off student loans. Good luck to you and your husband on paying down your student loans.

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Know What You Are Getting Into!

by Dawn Small
(Philadelphia, PA)

Deciding to go to college is a huge and exciting step, especially if you are a high school graduate. I remember that feeling of freedom and independence. I couldn't wait to start my parent free life, creating new experiences, meeting new people, and working towards the career of my dreams. What I wasn't ready for was the tremendous responsibility of taking on the management of school finances.

I was very naive about tuition fees and student loans when I began my college experience. Due to my lack of knowledge in the past, I am currently suffering the consequences of wanting to continue my education and not having enough funds to do so. My dream of becoming a nurse might be just that; a dream.

I sit here thinking, if only I knew what I know now. I wish that I made myself more aware of what I was getting into when taking out school loans, maybe I wouldn't be in so much debt. College is very expensive, and can be even more expensive when you can't afford it. Unfortunately, I can't make college less expensive, however, I would like to share a few tips on how to make college expenses more financially manageable.

First, when applying to schools beyond your high school education, always consider the school's curriculum, but most importantly be aware of how much it costs. Most students overlook college tuition fees, and this is one of the most important aspects in the decision making process of choosing a school. When taking out loans for your school education, make sure you take out the required amount for that particular term. Taking out more than the required amount will result in the school refunding you a check of the difference. This may sound like its a bonus, but it's not. PUT ANY ADDITIONAL MONEY BACK into your financial aid account. As tempting as it may be to spend this extra money; this is a road that you do not want to go down. Remember loan money is money that you have to pay back.

Second, during the process of applying for financial aid, you will be asked if you are interested in receiving grant money; the answer to this question is yes. If you are poor like me, you better jump at the opportunity of free money every chance you get. Depending on your eligibility you will probably be offered a state grant and a Pell Grant. Even though you do not have to pay this money back, it is limited. Therefore, keep track of the disbursement of your grant money in addition to your loans.

Last but not least apply for college scholarships. If you are a high school student, the best time to apply for school scholarships is now! (See our page on Scholarships for High School Students for ideas). Inform your school counselor/advisor on your interest in scholarships and they should be able to assist you in the process. Apply for as many scholarships as you can, so that you can get your name out there in the open. However, be careful and read the fine print, some scholarship money you are required to pay back.

Know what you are getting into! Getting your college education is very important, but how you plan to get your college education is most important. Make sure that you are very much involved in the financial aid process. Be knowledgeable on how your financial aid is disbursed. Smart decision making regarding your expenses is also very important. Don't be like me, a 32 year old single mother paying off her debt in student loans, with no degree, wondering how I can make my dream come true.

Read more advice on from other students and parents at Paying off Student Loans

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Comment from your friendly team at College Financial Aid Advice
Thank you Dawn for sharing some very good advice and experience with paying off student loans. Student should know the cost of college before making their decision, and look at many options. There are also some Tuition Assistance Programs and many Scholarships and Grants for college. Good luck.

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Last Resort

by Danielle
(Corvallis, OR USA)

Being a transfer student can mess up your financial aid when you transfer in the middle of the year. No one told me that. I went from being fully covered with Pell Grants to having to take out quite a few loans because part of the grants were already used by my previous school. If I hadn't have done that I would've been fully covered.

I'm paying off debt as I go back to school again after a break and Student Loans are not "good debt." There's no such thing. You can file bankruptcy and still have to pay off your student loans, you can adjust your payments to match your income but that could lead to adding years to your payment plan.

When you get down to it, if you absolutely have to take out loans the best way to pay them off is to put as much money as you can towards them every paycheck, no matter what. You'll never fully be free to live the "American Dream" of a house and car and kids with financial freedom if you're constantly making that minimum payment.

Even if you only have ten dollars extra after all the expenses are paid, put it towards your loan payment. It could be the difference between taking 10 years or taking 30 years to become debt free.

Read more advice on from other students and parents at Paying on Student Loans

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Comment from your friendly team at College Financial Aid Advice
Thank you Danille for sharing your advice about student loan payments. Loans should always be a last resort. It is a good strategy to pay extra if you can to get those loans paid off early. Good luck.

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