About to graduate - Looking for student loan guidance

[Anonymous]

Hey everyone,

I have been reading this forum for a while and have been able to raise my credit score, but most importantly this forum has helped me develop a conscious mindset about finances and credit.  Here's my issue- I am graduating in May with 50k in student loan debt.  I took out way too much loan money than necessary to pay my tuition and rent, and have now realized how detrimental of a mistake that was. My parents raised me on extremely careless/wreckless values when it comes to debt, and luckily with age I have come to realize the control that debt can have over one's life if it isn't handled properly.  I am starting a job in January that is only paying me a 30k salary, but they are covering my rent and providing a car for me.

My question is... What is the best way for me to go about paying these loans?  50k at I want to say roughly 6% interest rate.  Is it possible to apply for scholarships this late in schooling in order to pay loans?  Should I invest money from my paychecks in order to accrue interest to pay the loans off with later?  What suggestions do yall have to offer when it comes to this?  Having this much debt is extremely uncomfortable for me and I would ideally like to get rid of it sooner than later.  I am considering asking the company I'm going to work for to help me pay off the loans, how would that work?  Can a company write that off?

Any insight is appreciated.  Thank you!

[Anonymous]

I graduated this past May, and have about $27k in student loan debt (went to a state funded school). You will have 6 months from the time you graduate college until you have to begin paying back your loans monthly.

One thing I wish I would have done differently is to start paying off the interest on your loans while still in college. I had never touched it once or even looked at it until after graduation. Had accrued about $2k in interest over those 4 years. Yours will be much higher. If you haven't started paying it off, I would do so immediately if you have the money for it. This is something I wish I would have thought about, but never really did.

You still have one semester left, so you can still apply for scholarships for your final semester. How much will it help at this point? It might knock off a couple hundred to a couple thousand dollars. Every little bit helps!

One last thing, I'm not sure how much you have looked into student loan repayment, but there are a few different repayment options. You may want to look into that. My payment will be at $288/month  or so. I can only imagine how high it would be as the debt increases. You might do better with one of the income contingent type repayment plans that are available. I believe you can switch repayment plans as time goes on and as factors change (ie: higher salary). Also, every company is different, but I don't think that yours will help you pay for undergrad. Basically your salary is supposed to cover that, or that's the impression I have received. However, I know of quite a few companies that will pay for (or contribute to) Master's degrees as they see it is bettering you, therefore, bettering the company.

Just my 2 cents. Hope this may help a bit!

[SCF]

There's not really a "trick" to paying down your debt.  The big win is paying as much as you can as quickly as you can.  That means being frugal, seeking opportunities for extra income, and aligning your finances with your priority of being debt-free.  If you want to save the most interest, direct your extra payments at your highest interest rate debt first.  If you can, pay off some or all of the accrued interest on your loans before they enter repayment - that way, the interest will not capitalize and become part of the principal of your loans.

You should also make sure you don't go backward.  That means no late payments, ever.  If you get to a point where you genuinely can't pay, you contact your lender before the payment is due and talk about options for reducing/delaying what you owe.  Keep track of your loans.  No one cares about your financial future more than you, so don't expect anyone but yourself to make sure there are no problems.

[Anonymous]

The one aspect I feel you do have in your favor is that your job will be covering your rent and providing you with transportation. That means you have extra money that can be put towards paying off your loans. What you will need to do if find out what your monthly expenses will be and pay those first, but make sure that those are your NECESSARY expenses. Then determine an amount that you are comfortable putting away in savings, even if it's only $50/paycheck. Have it automatically be transferred to savings every paycheck, that way you never see if and you won't factor that amount into what you have available to spend each month (this works REALLY well for me), I know you want to pay down the loan as soon as possible but you also need to work on establishing an emergency fund. Then whatever is left, determine how much of that can go towards paying off your loan. Do your best to pay close to or more than the minimum payment, especially since you have to account for interest accruing. Remember, even if you pay the minimum, part of that amount goes to paying off the interest first, then the remainder off the payment goes towards the principle. Figure out a game plan and then religiously stick to it. Hope this helps!

[Anonymous]

Thanks, that information really helps a lot!  Do yall know if after a certain amount of years the loans are forgiven, or do you have to pay back the full loan?  Would it be smart to try to get a personal loan with a lower interest rate and put all of that debt into that one account and pay it off that way? Is something like that possible?

[Anonymous]

The only way the loan can be forgiven is if you work with a loan forgiveness program. From my understanding, they require you to work for a non profit organization for a period of 10 years while still making the minimum payment on the loan throughout that period. After 10 years, the remaining balance will be forgiven, but private school loans are not eligible.

[Anonymous]

Thank you for the info!

Seeing as I will be making 30k, does anyone have any idea roughly what my monthly payment will be?  Is that a low enough salary to apply for income-based payments, and if I do so, what are the negative reprecussions of this?  Just that fact that more interest will build up?

Also, does anyone have any information on employers helping pay loans; is this common? Does the business get to write it off?  I want to see if this is worth suggesting to my employer.

I appreciate the answers - I am trying to make the smartest decision I can.

[Anonymous]

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@Anonymous wrote:

Thank you for the info!

Seeing as I will be making 30k, does anyone have any idea roughly what my monthly payment will be?  Is that a low enough salary to apply for income-based payments, and if I do so, what are the negative reprecussions of this?  Just that fact that more interest will build up?

Also, does anyone have any information on employers helping pay loans; is this common? Does the business get to write it off?  I want to see if this is worth suggesting to my employer.

I appreciate the answers - I am trying to make the smartest decision I can.

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Check out this website for info in regards to options for paying back your loans https://studentaid.ed.gov/sa/repay-loans/understand/plans

In regards to your employer helping to pay back your loans, I don't think they will unless it is part of your hiring agreement. For example, being hired with a 2 year degree on the basis that you obtain your bachelors within a certain time frame from your hire date. Plus I believe you would have to be employed by them before starting school not after (tuition reimbursement, etc.). But I don't know what field you are entering, so I can't say.