When I graduated from college I thought I had all my finances under control. Sure I had some student loan debt, but I had been able to get through four years with only the equivalent of one year’s worth of expenses and tuition in debt; compared to those with hundreds of thousands of dollars in student loans, I felt pretty good. Then I entered the “real world” and everything changed. I’ve been out of school four years now, paying the optimal monthly payment on my loans every month, and I’ve barely made a dent.
As a student applying for loans, I assumed that as long as I made my monthly payments I would see the number go down, plain and simple. I figured that those high school teachers I had that were still paying down their loans in their 40s must have put off payments or took out enormous loans; why else would it take that long? As the reality of the situation sunk in, and I realized the impact of this magical “interest rate,” my student loan debt suddenly felt much heavier. And I’m not alone. According to a recent survey conducted on behalf of the AICPA by Harris Interactive, only 39% of respondents fully understood the burden student loan debt would have on the future, and a whopping 75% have made a personal or financial sacrifice because of monthly student loan payments, like postponing getting married, having children, buying a house and saving for retirement.
This spring I proudly watched my little brother graduate from college, but as I looked out at the sea of graduates, my mind couldn’t help but think of the immense amount of student debt that lay before many of them. Lucky for my brother, working at the AICPA and with our members has given me access to a treasure-trove of tips and information for managing and paying down student loan debt. Here are a few basics that I passed along to him from 360 Degrees of Financial Literacy.