Being free from student loans is about:
- Avoiding student loans altogether, or
- Paying your student loans off aggressively. Then go back to step 1 as you plan and save for your children’s education!
I know my advice to avoid student loans (and/or pay existing loans off aggressively) raises some hackles.
The cost of college is super high and your parents may not have the ability, or maybe the desire, to help pay for your college. It looks like you have no other choice but to take out the loans being offered to you.
The interest rates are low. You don’t have to start paying them back until after school. You will get a good paying job after school which will make it easy to pay back the loans. And all the other stuff you hear if you are considering a student loan.
But consider this first.
Here’s my view of how student loans work out for the average group of 10 people.
- 30% are ruined financially for life
- 30% are harmed financially (but not ruined)
- 20% will come out on the good end of the deal after about 10 or 15 years
- 20% will come out looking great and clear the debt within 3 years or less of graduation
So 6 people are harmed financially in varying degrees and 4 come out OK. You have a 60% chance of being harmed financially when you take on student loans.
That’s a recipe for disaster for too many people in my opinion. Give step 1 some serious thought before making any commitments.
Paying Down Student Loans Aggressively (Step 2)
One size does not fit all. Whether it clothes or student loan repayment plans.
It is very easy to set your loans up on a very, very long repayment schedule. For some, 30 years isn’t long enough to make the monthly payment affordable.
For others who have good incomes, the longer repayment periods make it way too easy to make small payments and let the little devil take up residence with you. It makes it easy to go out and buy a home and make a huge financial commitment (funded by even more debt). Not wise.
You should look at your student loans like a snake that has gotten loose in your home. Don’t ignore it… something bad will eventually happen if you don’t find it and get it into a cage. Or just kill it!
Freedom is No Student Loans
Student loans can go horribly wrong if something happens to your income.
Sometimes life has a way of throwing curve balls.
It’s a lot easier to handle the ups and downs of life when you are debt free… including the student loans.
Choose freedom, please!