Now, I’m not saying don’t pursue those degrees. If you are passionate about something, you need to follow that passion. What I’m saying is, give yourself a reality check in what you can actually do with the degree you’ll be earning. And then base your college choice on that. You don’t want to go to a school that’s going to cost you $120,000 to end up with a degree that maybe will pay you $30,000/year. You’ll be 22 and treading water just to stay afloat, which isn’t exactly how you want to start your professional career and adult life (trust me, you’ll still want to have fun money for the happy hour margaritas…and outdoor concerts….and random trips to Miami).
So if you truly want to be a teacher, be a teacher. But find a college that isn’t going to bankrupt you at the end of the day. A $40,000/year school, for the most part, is going to give you the same degree as a $15,000 one, so why waste the extra money?
3) Don’t Waste Your Resources
This drives me crazy. Student loans are meant to provide the bare minimum: enough for your school tuition, room & board, and food. You know, the basics. Do not spend the money you have loaned and have to pay back WITH INTEREST on a $200 Xbox to give to your college boyfriend as a Christmas gift. Or on a 10 bottles of vodka for your sorority party. Or on a killer Halloween costume you’ll wear for one night to your crush’s frat party where he’ll end up hooking up with another girl. Not. Worth. It. It’s borrowed money, and borrowed money is only used for the important stuff. Want all that other crap? Get a job. Or go without. The best thing about college is that everyone is just as broke as you, so when you say, “Hey, can we just split a bottle of Kamchatka? Smirnoff is too high end right now,” they’ll totally get it and won’t completely disown you. It’s part of the college experience – enjoy it. (Except the Kamchatka. You won’t enjoy it, and it’s best to just go without in that situation.)
How to Pull Yourself Out of the Black Hole (Post-Graduates)
Unfortunately, not everyone can win a full-ride football scholarship to Alabama or become a Rhodes Scholar, and for those not in those buckets, student loans are a necessary evil. Hopefully you borrowed the least amount necessary, but even if you went a little loan crazy, you have the opportunity to kick these to the curb…and potentially do it quickly. Here’s how:
1) Even a Little Help is Good Help
Did you know that if you elect to have your federal student loan payments automatically taken out of your bank account each month, you can save 0.25% on your interest rate? Now, it might not seem like a lot (just a few dollars off your payment each month), but you could end up saving a couple thousand in interest by the time your loan is all paid off. And hey, for something that easy, it’s worth it.
Learn more or sign up here >>> My Fed Loan: Direct Debit
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2) Find the Best Deal
If you carry a few loans with high interest rates, it may be a good idea to consolidate these if you can find a lender that will offer a lower rate. The difference between a 5% rate and a 7% rate on $50,000 in student loans (and a 30-year repayment period) is over $23,000 in interest and $65/month. And that’s a nice chunk of change.
There is a federal Direct Loan Consolidation program, but if you also have private loans you’d like to roll in with those federal loans you carry, you may have to go to a private lender to consolidate. Remember when you’re doing this, though, that if you have special provisions attached to your current loan, they will not transfer when you consolidate. Also, you may be able to lower your payments by extending the length of your loan, but you’ll end up paying more interest on them in the long run. If you’re in dire straits, extending it may be necessary, but if haven’t sunk to the “Ramen noodle diet” level quite yet, I would keep your repayment period as short as possible.