Why Student Loans Worked For Me

medium_11696993404I reached a milestone in my financial journey this month that I have been looking forward to for a long time: I paid off my undergraduate student loans. While I feel relief that I’m closing that chapter of borrowing, looking back on my college preparation and experience, it was all worth it. With this in mind, I wanted to share a few reasons how I made borrowing work for me:

1. I went to a state school: I did not even consider private or out of state schools. In Washington, this still gave me good options to choose from and ensured I would be paying the lowest tuition possible.

2. I didn’t take out private loans: Private loans (loans taken out from anyone except the federal government) tend to have higher interest rates and inflexible payment plans. Many also have a provision that allows them to raise your rates at any time. Because of this, private loans hold a lot more risk then federal loans.

3. I chose a marketable major: My Bachelors degree is in Finance, and the job it provided me after graduation had a competitive starting salary that allowed me to start repaying debt right away.

4. I worked while in school: Because I always had a job (sometimes two, sometimes three) I was able to cover variable expenses without needing additional loans.

5. I graduated on time: I went into college with a few credits from advanced classes in high school, meticulously planned and graduated on time with the exact number of credits needed. This was tight even with my planning and if you are an athlete or change majors, it can be nearly impossible to graduate on time.

6. I chose the standard 10 year repayment plan: I started with the standard repayment plan but recently have paid larger amounts when I could. Depending on your interest rate, anything longer than 10 years (or the income based choice) is risky because you might not be paying enough each month to cover your interest. This interest can continue to compound and create a bigger problem in the long run!

Extra Credit:
While many people consider student loans ‘good debt’ because of the value they should bring you in terms of a degree a lot of people don’t realize that student loans are the a type of debt that cant be forgiven in bankruptcy. It sticks around forever, no matter what!

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