Today many young people come out of school with significant amounts of student debt. In fact, 70% of the class of 2015 left school with student loans averaging $35,000 per student. Ouch! To repay that amount of debt will require a monthly payment of $354 for 10 years. That will make it difficult for those young working folks to buy a car, a house, even to take a vacation.
Interestingly, the Google search for “paying student loans” only returned 666,000 hits. But those sites provide good information – start at www.studentloans.gov.
- The first step is to be sure you understand the terms of the loans you owe.
- Don’t ignore your loans – they won’t go away and if they become delinquent it will negatively affect your credit and make it even more difficult to qualify for a car loan, a credit card, or a mortgage.
- If you can, make extra payments to reduce the loans faster – you will pay less interest this way as well.
Some graduates end up with loans having different interest rates. A good approach is to repay the ones with the highest rates first – a simple but effective strategy. The key is to be an informed consumer – it will pay big dividends.