Repaying Your Student Loans

Here are some suggestions from Bankrate.com on how to repay your college (student) loans. It's pretty basic information on the options you have to pay back your college loans. Of all the choices, here is my favorite:

Standard repayment. The most direct method of paying off your student loan, with a standard repayment plan you'll pay a fixed amount, at least $50, each month. You'll also have up to 10 years to pay off the loan. Although your monthly payments will be slightly higher than they would be under the other repayment plans, you'll wrap up the debt more quickly, which means you'll pay less in interest.

Yep. Pay it off as early as you can -- while you're still used to living as a student. Once "real life" gets ahold of you, you'll see all sorts of items (like TVs, iPods, etc.) that used to be "would like to haves" that are now "must haves" and you'll spend accordingly -- making it hard to manage your mounting debt. In fact, I'd even go one step farther and recommend using the method above to pay back your loans, but also adding extra payments as often as possible to get it paid off in a hurry.

For me, repaying my college loans was pretty easy. It started with me holding jobs all throughout college and earning several scholarships and an assistantship to boot (this, by the way, was with minimal support from my parents). This allowed me to graduate with an MBA with only $5,000 in debt or so. The second part of my payment plan was that I got married to a saver and shortly after we got hitched we paid off my school and car loans with money she had saved. ;-)

I know that not everyone can marry someone who's saved enough to pay off their debts, however, the key was that I made it very easy to do so by keeping my debt as low as possible. If people can graduate school with a minimum amount of debt, they should be able to pay it off quickly given that their income after college will be much higher than their income would have been if they had skipped school.

For more information on the economic benefits of college, see these links:

• New MBAs Finding Education Pays Off Big Time
• The Value of an MBA
• College Majors that Boost Your Paycheck
• The Value of an Education

For more information on how to save and pay for college, see these links:

• 4 Ways to Save Big on College Costs
• College Financial Aid Can Save You Lots
• Tax Savvy Ways to Save for an Education

Free Money Finance recommends Emigrant Direct.

Comments

[Dus10]

I dread the day that I have to start paying back my student loans. I am going to be starting work towards an MBA immediately following my BS, but I am going to start paying down my loans before I start my MBA. Unfortunately, I went to one of those barely accredited trade schools before I actually started working on my degree. That cost me $10K for a year, after grants. I do think it payed off as the certification I received, as well as the experience I have acquired, has really improved my earnings. I already make about $20K more than a fresh grad averages, but I have earned it. I have racked up $20K at my university, but it could have been $40K. I kept it to a minimum by getting merit based scholarships and using CLEPs and portfolio work. My employer paid for a couple of classes, as well.

I plan on my employer paying for nearly all of my MBA. Anything that is not covered will be paid for by me, without a student loan. If anything, I will still be able to get the Lifetime Learning Credit for another year or two.

[David]

I recently graduated college with $17,000 in student loans. I've worked throughout college, and I have saved up more than enough to pay off my debt. Now I'm wondering if its better to pay it all off now, or pay it off monthly for 10 years to raise my credit score. I only got my first credit card last year, and I don't have much of a credit history. Do you think postponing my loan payment might mean a lower interest for a future big purchase, such as a house?

[FMF]

David --

Are you asking what I would do or what I think you should do? ;-)

[Terry]

What really makes me ill (with jealousy), is when I hear about people getting their student loans all paid off by a rich family member, or Mommy and Daddy. If we could all be so lucky right!