How to avoid drowning in student-loan debt

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So you’re graduating, the clock on those loans is ticking and you get a mean case of the cold sweats every time someone mentions the “economic climate” or the “poor job market.”

The average student loan debt is $27,000, but even with the dismal job market, the Federal Census Bureau still praises the investment that is your education. Those who graduate with a bachelor’s degree still make double that of those with only a high school diploma.

Let’s say you have $30,000 in loans with an interest rate of 4.25 percent, the median rate as of April 2013. If it takes 20 years to pay it off, you’ll pay close to $45,000. That’s no number to shrug at, but it is estimated by the Census Bureau that you have a good shot at making approximately $900,000 in excess to what you would have made without that degree. That’s a 1,900 percent return.

Maybe you don’t want to hear what could be; you want the truth, here and now. First you should know what kind of loan you have, the interest rate and the amount you owe. As a UVU student, chances are you have a Federal Stafford Loan. Find out if it’s subsidized, meaning the government covered the interest for the time you were in school, or unsubsidized, where your loan racks up interest. Also note the interest rates goes up or down every July 1. Stafford Loans max out at 8.25 percent, though the trend for the past 20 years has shown a slight decrease every five years, dropping a full 1.1 percent since 2011.

There are ways to delay paying back as well as receiving forgiveness for your loans. If you teach and have a Stafford loan you can look into the Teacher Forgiveness Program. In the TFP, if you teach at a low-income public school you may have $5,000 forgiven from your loans. Other options for loan forgiveness include joining the Peace Corps or AmeriCorps, some military service or work in law enforcement can grant you partial to full loan forgiveness.

Another option is loan deferment. If you meet some qualifications (disability, unemployment, school attendance or work with underprivileged children), you’re entitled to deferment.

Financial guru Suze Orman who (literally) wrote the book on loans gave her top five tips for graduates: 1- with your extra money always favor your 401(k) or Roth IRA over paying your student loans, 2- don’t consolidate your student loans with your spouse’s, you both will end up paying more in the end with shifting interest rates, 3- bankruptcy is never an option for student loans, it’s better to carry them to the grave, 4- be careful when consolidating loans, you can’t refinance them, so play the balancing game, and 5- always look for opportunities to defer; student loan lenders are the nicest in the business and are the most likely to help you out.

By Nicole Shepard

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