Strategies of managing student loan debt

<p>Hello forum parents,</p>

<p>I am a student entering my final year in college, and evaluating not only my the possibilities of my post-college future, but also the constraints. In sum, it looks like I will be leaving college (at a top liberal arts college) with a total debt burden of $16,500, with approximately half of this in subsidized loans, and half unsubsidized.</p>

<p>What recommendations can you give concerning the best ways of managing this debt, paying it off quickly, and making sure that such debt does not strangle my post-college plans?</p>

<p>Beyond simply recommendations, what financial information, particularly concerning debt, do you think that all college seniors should know?</p>

<p>If you plan to pay over the minimum required then pay off the ones with the highest interest rates first. Unsub Staffords have a 6.8% rate. Your subsidized Staffords probably have a mixture of rates so make sure you know which one has what rate.</p>

<p>If you will be borrowing for any other purpose (car purchase, credit card) then compare rates and make sure you choose wisely. For instance credit card rates will be higher so don't run up credit card interest to pay down extra on student loans. (in fact always pay off credit card balances every month as the interest rates are ridiculous) If you will have a car loan, again compare the interest rates. If you have a student loan with 5.6% interest and the car loan will be 6% then you are better off paying down the car loan. </p>

<p>Student loan interest is deductible for tax purposes.</p>

<p>PAY ON TIME!!!</p>

<p>In today's Washington Post, personal finance columnist Michelle Singletary has written a review of a new CliffsNotes publication, "Graduation Debt; How to Manage Student Loans and Live Your Life," by Reyna Gobel. [url=<a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/06/05/AR2010060500721.html?hpid=topnews%5Dwashingtonpost.com%5B/url"&gt;http://www.washingtonpost.com/wp-dyn/content/article/2010/06/05/AR2010060500721.html?hpid=topnews]washingtonpost.com[/url&lt;/a&gt;] Stop by your local bookstore and take a look at this book. From the review, it appears to have a number of useful ideas for students in your situation.</p>

<p>You can pay off your loans. Just be sure to make them a priority, not something that you pay after the cable/broadband/cellphone-with-internet or other seemingly necessary but truly luxury items.</p>

<p>If possible, when you get your first real job, either live at home or live cheaply with a roommate to minimize rent costs so that you can pay off your debts ASAP.</p>

<p>Agree with above suggestions
List your loans in the order of the interest rate starting with the highest rate down to the lowest rate loan. Focus on paying the higher interest rate loan as a priority. Add as much extra money to those every month as able. Pay every month on all of the loans but pay either minimum or a little more, but add the extra money to the highest interest loan. As you pay that off, then focus on the next highest loan with a high interest rate. This is an actual strategy that financial planners use. Debt actually gets paid faster using this strategy.
Please pay on time, that will hurt you more than anything else.</p>

<p>Live within your means. Bills first, pleasure later. Be money smart.
I wish I learned these early on in life. It takes many years to repair bad spending habits.</p>