Loan Lessons Learned

Many of you have a student loan to help pay for the cost of your education.  Like you, I took out loans to pay for college.  Being the first in my family I did not know very much about loans, all I knew was that I needed them.

StudentDebt

Every year in Early February students fil out their FAFSA and mail it in waiting to see what their aid package will be.  For some of us it is a mix of grants and loans.  I bet not many of you think about how much of those loans you really need, I know I didn’t.  I learned to not care because the second week of classes I knew I would get a nice refund from the financial aid office.

While those refunds were great and I had fun with each and every one of those checks….from a new pair of jeans to a trip to Florida…I never thought about the later.

Here I am several years later and I am repaying my student loans.  While I do not consider student loan debt bad…I do consider my semester refund check habit bad.  Because I took out the maximum loan every year and enjoyed those refunds, I get to pay about $40 more a month in loan payments than I would have if I would have just took out the amount I needed to pay for tuition, room and board.

You might think that $40 is not that much…well over the next 30 years that $40 will amount to just over $14000.

On average, students will graduate with $23000 in debt.  That equals a monthly student loan payment of $267.  If that student would have tightened their budget and took out a little less, let’s say $20000, they would pay $230 a month, saving themselves $37 a month (over $4000 in 10 years).

The financial decisions you make today could haunt you 10-20 years from now.  From student loans to credit cards…

What student loan questions do you have?

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6 responses to this post.

  1. Posted by Lindsey Taflinger on October 20, 2009 at 1:35 pm

    I wish someone would’ve given me advice like this during my undergrad career! You Green Eagles are pretty lucky! 😉 I just graduated in May and Sallie Mae has been bombarding me with letters and emails about repaying my loans ever since!

    I’ll try and help get the questions going…. Do you think it’s a good idea to consolidate your loans? I am thinking of consolidating mine (because I have so many!) but I know once you do so, it cannot be undone! Suggestions?

    Reply

    • Posted by greeneagles on October 20, 2009 at 1:55 pm

      That is a great question! I think you have to consider how many loans you have (are they with 3 different lenders or just 1), how much you have in loans and if you plan on going to grad school. I went to grad school and then I consolidated my loans. I had 4 different lenders and a large debt so it made sense for me to consolidate (its hard enough to remember to pay 1 bill, let alone 4). Just an FYI….when you consolidate you can only go through the federal government right now. Banks use to do student loan consolidation but got out of the business last year. You also have to decide on a repayment plan, while the graduated plan seems great (your 1st 2 years might have a low payment, but it goes up every 2 years…my husband did this plan and his payment went from 210 to 320)

      Reply

  2. Posted by Stephanie Williams on October 21, 2009 at 4:36 pm

    do you have to reapply for loans every year?

    Reply

    • Posted by greeneagles on October 23, 2009 at 8:57 am

      Yes you need to apply for loans every year, if it is a federal loan you need to fill out the FAFSA which is available in January and you should get it in by early February.

      Reply

  3. Posted by Travers Swan on October 22, 2009 at 8:21 am

    I don’t have a loan right now, but I’m thinking about getting the Stafford Loan

    Reply

    • Posted by greeneagles on October 23, 2009 at 8:58 am

      The stafford is a great option, it is a federal loan and the interest is not bad. There are 2 options: the subsidized and the unsubsidized. The only difference is the subsidized loan defers interest until you graduate or are out of school for 6 months…if you get a sub or unsub loan is based on income.

      Reply

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