Studies show time and again that a college degree greatly increases your earning power throughout life. Colleges seem to have figured this out as well because they certainly seem to charge a bundle these days. If you are going to attend, taking out student loans is a must and that ultimately means they need to be repaid.
They say graduation day is one of the happiest in your life. I think this is a crock. Personally, I would have preferred to have stayed in college another 10 years or so! This feeling was reinforced all the more when that first student loan invoice came in. -What do you mean I have to pay the loan back? Already?!- It was not a good moment.
The pain involved in paying back loans is in direct proportion to the amount you borrowed. Let’s just say I borrowed what I needed to pay for the critical things like tuition, books, an apartment, a tab at the local sports bar and so on. Ah, it was pure bliss. The repayment period was not.
There are three basic ways to deal with your loans in the long run. The first is to not pay them. This is only an option if you pretty much intend to live like a hermit. Since I didn’t, I had to look at the other two. The other two involve how to pay them off. One approach is to add an extra $25 to each loan payment. This will cut down the total payment time by years and save you a bundle in interest. Frankly, it was to depressing for me since the amount owed seemed to drop far too slowly each invoice.
I went with the second approach. I react well to motivation. To get it, I lined up my various loans and picked the one I owed the least on. I made the minimum payment on the others, but tried to do everything I could to double up on the monthly payment on the smallest loan. This resulted in it being paid off fairly quickly, which made me feel less dire about my overall loan situation. I then moved on to the next one and so on.
Was there any mathematical benefit to this approach? Maybe. I never looked into it. My primary goal was just mental. The sooner I could tick off some loans as paid, the better I felt about the possibility of paying them all off one day and the future in general. It might just work for you as well.
Thomas Ajava is with USStudentLoanCompanies.com – learn more about the types of student loans available after the government takeover of the market.