Although most people would like to have zero debt compared to much debt, student loan debt may not be as bad as other kinds. With low interest rates and flexible payment options, Carolyn Bigda from the Chicago Tribune contends that student loans tend to be more forgiving than other types of debt. However, the primary focus should not be what debt people should get into, but rather, consider saving before paying off loans.
On average 65 percent of students who attend a four-year private college and 56 percent of students who attend public universities end up raking in $28,100 and $22,000 in student loan debt respectively. A recent graduate may be concerned with paying off that debt as soon as possible. Doing just that may not be the best idea. Saving more of your income compared to paying off student loans may be the wiser decision depending on a person’s future goals. For example, if you would like to buy a home, purchase a car, or take a vacation once in awhile, having savings will help pay for these things without increasing total debt. If there are no savings available to pay for these goals, financing them is the only other option, which ends up leading to greater debt.
While completely neglecting student loan debt is not an attractive option either, there are ways to save money and pay off that debt. Private loans may be refinanced, and if the interest rates are still burdensome, targeting private loans first may be advisable. In the case of federal loans, student loans may be consolidated and interest rates could be reduced as much as .5 percent. Also new rules announced in October would result in a waiver of any remaining balance if after 20 years of repayment a student loan balance still exists.
Depending on ones circumstances and financial situation, it may be wise to consider saving over paying off student loan debt. College graduates Philip Taylor and his wife, Teresa did just that. They held off a bit on paying back their student loans, they saved, and were able to purchase a house, pay off their credit card balances, and start funding a retirement account. When all was said and done, they had enough saving to pay back a huge chunk of their student loans.
Carolyn Bigda, Consider saving before paying off student loans, https://www.chicagotribune.com/business/yourmoney/sc-cons-1117-started-20111118,0,6457015.story (accessed 11/18/2011)