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.
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?