Should I start paying off my [college] loans right now?

[DamianTV]

Lets keep it real, bump it in 5!

One other thing to keep in mind is that laws are always changing. The current law is that if you ever need to file bankruptcy you cant include student loans or IRS debt. The student loans part may change...

 

[Scofield]

I'd still like to know what the OP is eating. Are they somehow living off of their student loans? All they're going to make is $1600 in a summer.

I live at home right now.

My expenses at the moment include: Car insurance, gas, phone bill.

My parents cover housing, food, internet, and the others.

 

[Jeremy]

You are in the same position as I am, except you are graduating earlier. I'm always trying to pay off my debt. I live simply to get rid of it as fast as possible. I just can't stand debt... makes me feel weird.

 

[Jordan]

Totally depends on what kind of interest you're paying.

If they're government subsidized loans you're only going to be paying like 4.5% interest, which isn't very much and staying at least remotely liquid wouldn't be a bad idea.

I mean, that $1600 on your loan is going to save you $72 a year...$8 a month. At that kind of price you're probably better just sitting on the cash for other unforseen expenses that will cost you far more to finance.

 

[libertybrewcity]

i was thinking the same thing. im only two years into college and i have probably 50k in student loans. im sure ill have another 50k in the next two years, and probably more if i go to graduate school.

If i were you I would keep the money and use it to live. I wouldn't wait for shit to hit the fan because you don't know if it will. the united states has gone through some hard times before and has survived. if you have large students loans like i do what is 1k? if you planning to go to law school you will likely have a decent job given you do well, and then you will be able to make the monthly payments.

If shit does hit the fan then you will still owe that 49k, and you would be able to use that 1k to survive.

On the other hand if you go to a public school and have small loans, getting it out the way might be best.

Also, I was thinking of paying of some of my loans myself, and i am glad i didn't because i ran into some problems and needed the money. you never know when you will need a few hundred dollars.

 

[WaltM]

You are in the same position as I am, except you are graduating earlier. I'm always trying to pay of my debt. I like simply to get rid of it as fast as possible. I just can't stand debt... makes me feel weird.

that is the right attitude.

in addition, you should only continue school if you have a good reason to believe you'll make more to pay it back, otherwise you're only digging yourself deeper.

 

[LibForestPaul]

that is the right attitude. not!!!

What are you going to do w/o mom and dad?

1. Figure out how to make a living, and where to move if you can not afford where you are living currently.
2. Figure out what profession you will enter to make a living (p.s. lawyer debt is $$$, are you certain about this?)
3. Create a REAL budget. i.e. If I HAD to buy my own food, and pay my own rent, all my expenses, and my min obligation, what would it cost
4. Save for a six month cushion for when you are unemployed.
5. Pay off debts in order of high to low interest.

 

[Jeremy]

What are you going to do w/o mom and dad?

1. Figure out how to make a living, and where to move if you can not afford where you are living currently.
2. Figure out what profession you will enter to make a living (p.s. lawyer debt is $$$, are you certain about this?)
3. Create a REAL budget. i.e. If I HAD to buy my own food, and pay my own rent, all my expenses, and my min obligation, what would it cost
4. Save for a six month cushion for when you are unemployed.
5. Pay off debts in order of high to low interest.

So you're saying if you go to college, you should live with a bunch of drunk kids and go into more debt because you need to learn how to buy food?....................

Instead of "learning how to budget," why don't you START budgeting by living at home and saving tons of money.

 

[MelissaWV]

I think a lot of people were saying the same thing around Y2K.

We'll see. Bump this thread in 20 years and see if we're still here

People were saying similar things all the way back in the 60's (some of the people my parents went to school with figured they could take out loans and not pay them back, for similar reasons). People seriously say the same thing every few years.

What it boils down to is someone taking out a loan, which is a contractual agreement, and then thinking they can be sneaky and go back on it because they were "too young" or "too stupid" or the lender was "dishonest" or whatever they think is most convincing. I find it unconvincing, and am glad the OP doesn't seem to be entertaining that idea. If you want to be dishonest, fine, but don't whine when you're reaping the rewards. Loans are a bad idea, but that ship has sailed for the OP. The question was: now or later?

In light of the fact you appear to have most things paid for by your parents, I'd start paying off the loans. Once you leave the nest, you will find yourself confronted with all manner of charming bills to pay and responsibilities to meet, and it's unlikely you will have a staggeringly good job right out of law school. This is barely making a dent in your loan, but it will be that much more of a dent you don't have to pay later. Right now, there's not much more I could suggest you invest that money in for a guaranteed return that rivals the amount you'd save on interest.

If your parents are well off (and that's an "if"; I am not assuming they are merely because they're paying a lot of your way) you might propose a "matching" arrangement whereby they match whatever you put towards your student loan, or maybe contribute $1 for every $2 you put towards paying it off.

I would also venture to find a better job than Dunkin Donuts. It's summer. You have more time on your hands. A good supplemental parttime job is the woefully low-paying but nicely relaxing rental car driver job. You drive cars from one location to another, or you might drive a car to someone's work, pick them up, and drive them back to the rental car location. You spend most of your time alone with the radio, driving around familiar roads. There are a lot of little jobs like that with which you could add to your income.

I still stand by my advice, though, that a small portion of your money should go towards keeping you sane. You're going to want to go DO something from time to time. Budget for it, or you'll burn out quickly.

 

[WaltM]

What are you going to do w/o mom and dad?

1. Figure out how to make a living, and where to move if you can not afford where you are living currently.

yes.

2. Figure out what profession you will enter to make a living (p.s. lawyer debt is $$$, are you certain about this?)

yes, of course, everybody should worry about this

3. Create a REAL budget. i.e. If I HAD to buy my own food, and pay my own rent, all my expenses, and my min obligation, what would it cost

yeah, what's your point?

4. Save for a six month cushion for when you are unemployed.

I dont go by 6 months, or any limit, I save what I don't spend, in money and in supplies.

5. Pay off debts in order of high to low interest.

and if you only have one? what about avoiding debt if you can?

 

[rockjoa]

You are in the same position as I am, except you are graduating earlier. I'm always trying to pay of my debt. I like simply to get rid of it as fast as possible. I just can't stand debt... makes me feel weird.

I was the same as you I hate loans and credit cards, luckily I got a 2 year associates degree at a community college. I got a good job, paid off the loan right away, and lost the job within only 8 months due to the recession. Due to job scarcity I ended up working retail, the pays not good but meets my needs and I can still put away savings. What I'd recommend is if you have a small loan try to pay it off right away by making a payment plan and seeing if you can pay it off in a short amount of time. If you have one of those big $40,000+ loans that the gov't is giving out like candy I'd just sit on it and just make minimum payments, odds are that the system will crash before the 20 year, so I guess anything goes.

I'm annoyed by those that think college is a right, it is a privilege. It used to be that when taking out a loan it involved actual investors and banks that run the numbers and give you a loan based on data about your odds of paying it back following your career. It may be very disappointing getting a loan rejected but its needed to keep both parties in check based on the feasibility of a career choice. But now the gov't has taken over and is giving out money for almost everything, this may seem great if you're a student but would really suck if your career doesn't pan out because you chose a risky career and took out lots of loans.

The worst part about loans is that they drive up the cost for everyone. That means those that want to go to college but don't want to take out loans likely won't be able to. I went to community college because that's what I could afford, I have a great fear of loans which drove me away from a 4 year college.

My recommendation for those out of college, get any job you can right away even if it is undesirable and work while looking for a career related job, that way you can keep your finances in order. My advice to those going into college, be reasonable and consider the odds of success and loan amount, is it manageable if I have to take a low paying job?

Good luck, there is no way of knowing whats going to happen just think and use research as you go.

 

[MelissaWV]

What are you going to do w/o mom and dad?

1. Figure out how to make a living, and where to move if you can not afford where you are living currently.
2. Figure out what profession you will enter to make a living (p.s. lawyer debt is $$$, are you certain about this?)
3. Create a REAL budget. i.e. If I HAD to buy my own food, and pay my own rent, all my expenses, and my min obligation, what would it cost
4. Save for a six month cushion for when you are unemployed.
5. Pay off debts in order of high to low interest.

This was much better advice when I could be convinced Dunkin Donuts wasn't likely the best job in the area he could get.

1. Moving costs money in and of itself. People forget about this when their basic advice is "move somewhere cheaper." Figuring out how to make a living is entirely different from actually being able to find a job that pays a living wage AND allows time for studies.
2. I agree that he should review his desire to go to law school. God knows there are already myriad lawyers out there, and many of them are glorified clerks. It's not some six-figure guarantee.
3. If he HAD to buy his own food, pay his own rent, all of his expenses, his minimum loan obligation, AND go to school at the same time, he'd probably be screwed. Perhaps this is why it's a fine thing to live with his parents. I have no idea why that's considered so awful by people. It can be a sound financial decision, so long as the person in question is not mooching and gets along okay with their parents. You're pretty much assuming the guy's a mooch. In reality, his parents might still be paying the same mortgage (or have the same paid-for house) whether or not he was still living in his room. He "costs" them food and electricity and a few other incidentals, which he can most likely work off by doing yard work. Stomping out of the house to prove a point is a really silly thing to do.
4. Save for a six-month cushion while working minimum wage parttime jobs and going to school? In what universe does this math work?
5. Yes, he should pay off debts in that order. He didn't mention credit card debt, or a car note, or anything along those lines. The only debt mentioned is the student loan(s). I would focus on making as much money as possible during the summer to put towards that and keeping sane, and then study my ass off during the school year (and keep a parttime). He's already waist-deep in the college mire; he might as well try to come out of it with as little harm done as possible.

 

[WaltM]

So you're saying if you go to college, you should live with a bunch of drunk kids and go into more debt because you need to learn how to buy food?....................

Instead of "learning how to budget," why don't you START budgeting by living at home and saving tons of money.

that might "teach you" how to appreciate living, but if you can learn that without the pain, why should you? there's nothing inherently good about living with drunk people, or on your own, everybody has a different budget, lifestyle, and relationship with parents. I'm not saying take advantage of your parents, but there's better ways to waste money too if you wanted to (such as get an apartment without roommates).

when I used to live with my parents, i paid them rent.

what would they do with the extra room had I moved out? Rent it to somebody else? Would they sell the house and move to a smaller one just because I'm not there (they actually could if it was a long term state they'll eventually get used to)? When you move out, and your parents have your room sitting there, they're wasting money too on that empty space, unless they punish themselves by moving away too.

now is not the time to be toughing out anything, or showing off how you can spend money.

 

[WaltM]

This was much better advice when I could be convinced Dunkin Donuts wasn't likely the best job in the area he could get.

1. Moving costs money in and of itself. People forget about this when their basic advice is "move somewhere cheaper." Figuring out how to make a living is entirely different from actually being able to find a job that pays a living wage AND allows time for studies.
2. I agree that he should review his desire to go to law school. God knows there are already myriad lawyers out there, and many of them are glorified clerks. It's not some six-figure guarantee.

that much is certain.

I know lawyers that beg for work, and they live in major cities. You should only be a lawyer if you're actually interested in the job, and feel you will be above average.

If you're below average and "just in it because", just think of all those below average drivers, cooks, doctors, they're not always "better than not being one".

3. If he HAD to buy his own food, pay his own rent, all of his expenses, his minimum loan obligation, AND go to school at the same time, he'd probably be screwed.

Yep. Which is a good way to see whether school is for you at all.

Perhaps this is why it's a fine thing to live with his parents. I have no idea why that's considered so awful by people. It can be a sound financial decision, so long as the person in question is not mooching and gets along okay with their parents. You're pretty much assuming the guy's a mooch. In reality, his parents might still be paying the same mortgage (or have the same paid-for house) whether or not he was still living in his room. He "costs" them food and electricity and a few other incidentals, which he can most likely work off by doing yard work. Stomping out of the house to prove a point is a really silly thing to do.

yes, it's a stupid thing to do.

if you can afford it and it works out for everybody, great.

4. Save for a six-month cushion while working minimum wage parttime jobs and going to school? In what universe does this math work?

I've done it. But I doubt I'm a typical case. I had very frugal spending habits, and very good parents, I also went to school in a very prosperous area, so it's not as easy for everybody.

5. Yes, he should pay off debts in that order. He didn't mention credit card debt, or a car note, or anything along those lines. The only debt mentioned is the student loan(s). I would focus on making as much money as possible during the summer to put towards that and keeping sane, and then study my ass off during the school year (and keep a parttime). He's already waist-deep in the college mire; he might as well try to come out of it with as little harm done as possible.

yup. I don't know how much student debt he's in (assuming that's all it is), but law school or grad school is another $50K conservatively.

 

[MelissaWV]

...
I've done it. But I doubt I'm a typical case. I had very frugal spending habits, and very good parents, I also went to school in a very prosperous area, so it's not as easy for everybody.
...

I was leaving the parents out of it for this one, and assuming the student would be paying for *everything* on his own at once. That's what the other poster seemed to be suggesting. Do all of that AND save for six months' expenses? You can start on it, but it's going to take awhile, that's for sure.

Keep in mind (I don't know how old you are, and not asking ) that college now is pricier in a lot of respects. I wish more kiddos would take the first step towards responsible adulthood and examine whether or not college is for them at all, as you mentioned, by doing a cost/benefit analysis of the entire situation. You don't even have to decide then and there. You could take a year off before you go to college, get a job or two, and start trying to figure out what you'd really like to do and how you'd like to do it.

It seems that college is automatic after HS these days. It's ill-advised and it's going to be a big part of a largely inept and aimless generation to come, which I don't hold out hope will be any better-informed or freedom-oriented than previous ones.