Remember what it felt like to walk into a Toys R Us as a five-year-old? You knew exactly what you wanted, that life-size pink Barbie convertible or that automatic sports car with a real radio. You were going to be the coolest kid on the block. The only problem was that Mr. Piggy Bank didn’t quite have the hundreds of dollars stored up inside. I hate to say it, but things haven’t changed too much.
When it comes to college, we all know what we want. We want an education that will take us great places and get us there fast. The only problem is that universities are expensive, and our meager little piggies may not yet be plump enough to pay up.
That’s where student loans come in, and if you know how to handle them, you’ll be headed towards a bright future.
Tori Gibbs, sophomore at Sarah Lawrence College, is working hard to pay off her student loans. At $44,220 a year for tuition alone, it takes Gibbs a 15-20 hour work week and some funds in her savings account to keep up. She still expects to be paying off loans into her thirties and forties.
Julia Barnett, sophomore at Syracuse University, explains that she has student loans because her parents are paying for two schools at over $50,000 per year at once. She’s hoping that her current student loan is her first and only one. To manage her loan, Barnett says, “I work during the summer and save so that I’ll be able to help pay off the student loan, and my parents have agreed to help me with the payments once I graduate.”
Alex Cooper, Portfolio Manager at Deutche Bank, says “making a plan to manage personal finances is the best thing you can do.” You don’t have to dump every penny that you make into paying them off, but you do want to set aside a specific portion each week to go towards paying off your loans. That way, you don’t even feel like you’re losing money because it is as if it were never there!
The one problem with student loans is that they are tricky. Jane Bryant Quinn, “a leading commentator on personal finance,” gives seven tips on how to better understand student loans.
- The default rate is much higher than the government leads you to believe.
- You have no idea how fast an apparently modest student loan can build, if you skip payments.
- By law, student loans cannot be discharged in bankruptcy.
- The government and collection agencies can beat you with tactics not allowed for other types of loans.
- All the traps that await student borrowers also await parents who take education loans.
- You’re also at risk if you co-sign a loan and the borrower can’t pay.
- There are a few ways out.
For a further description of Quinn’s tips, visit here.