A Primer on Student Loans

By Jessie White

Approximately 44 million Americans collectively hold nearly $1.6 trillion in student loan debt.


This debt is holding back young adults from buying houses, starting families, and having flexibility in their careers.


So, where do we start?


Lots of people come to me with student loans mixed with credit cards and I tell them to get familiar with all of their loans. It’s important that you know how much you owe, what type of loans you have, what your interest rate is, and the length of the loans. Call your lender, and get this information for each loan.


What’s next?


If you just graduated, it’s even more important that you call your lender to see if you qualify for the 6 months grace period. Get details on this “grace period” because some lenders pause interest accumulation and some lenders don’t. I’ve had several clients that didn’t know that they would be paying back interest during this time and their first several payments that they made all went to interest. Next, ask about income-based repayment qualifications, deferment, and forbearance.


I would not recommend these programs without the guidance of a coach or mentor, but it’s still good to make note of the qualifications if something were to happen.


How do I pay this off quickly? 


Since student loans are not bankrupt-able and default loans end in garnished tax returns, collections, court orders and/or garnished wages, our best option is to pay the loan off as quickly as possible.


Take a look at your loan interest rate and the amount going toward interest vs. principal every month. When you pay extra every month you’ll probably have two options: do you want the extra to go toward your next payment or do you want it all to go toward principal. Always check box number 2! We want all of the extra to go toward the principal because the amount of interest paid per payment will slowly decrease and the amount of principal will slowly increase until the loan is paid off. This is why it’s especially important to put extra toward your loan in the beginning. You’ll see that debt-free date accelerate even more.


And finally…


My number one request is that you don’t suffer alone. There are so many resources available to individuals who feel burdened by student loans.


And remember: the earlier you confront and start working on paying it off, the sooner you will be free!


Jessie White is a Verified Financial Coach based in Greater St. Louis.


Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Willow.

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