Yusra3
VIP Contributor
Along with covering higher education costs by means of student loans, the idea of paying back that debt becomes a struggle to be endured by graduates who finally finish their studies. Once someone decides to become a homeowner, to a large extent it depends on a number of factors how long it will take to become free and clear.
If someone is in a normal ten-year repayment period for their federal loans, it will be exactly that - it will take close to a decade to fully repay the balance with equal monthly payments. In contrast to this, a predictable horizon would take into account the assumption that immediately upon graduation steadily income will cover all payments. Gaps in earnings or minimum payments that are done only per month thus has no choice but to drag out that payoff time.
Those hard-pressed could get an income-driven repayment plan where the installments they pay would be as low as 10-20% of their disposable income instead. Though a cash flow relief program provides smaller payment amounts but a higher accumulation of interest is obvious over the 20-25 years before a repayment is made.
Paying smartly is the fastest way of getting rid of debts and it acts as a gateway to freedom. Tax refund, work bonus, cost of living raise, and any unexpected monetary windfalls should be using lump sum payment to the principal balance. That accelerates repayment terms significantly. The fact that to refinance with lower interest rates to replace the higher ones also cuts down the total interest cost is another advantage of tighter policy.
The different stages of freedom from obligations always depend on each person but after having a plan, financial footwork after college and prioritization when paying student debt is what creates this needed freedom.
If someone is in a normal ten-year repayment period for their federal loans, it will be exactly that - it will take close to a decade to fully repay the balance with equal monthly payments. In contrast to this, a predictable horizon would take into account the assumption that immediately upon graduation steadily income will cover all payments. Gaps in earnings or minimum payments that are done only per month thus has no choice but to drag out that payoff time.
Those hard-pressed could get an income-driven repayment plan where the installments they pay would be as low as 10-20% of their disposable income instead. Though a cash flow relief program provides smaller payment amounts but a higher accumulation of interest is obvious over the 20-25 years before a repayment is made.
Paying smartly is the fastest way of getting rid of debts and it acts as a gateway to freedom. Tax refund, work bonus, cost of living raise, and any unexpected monetary windfalls should be using lump sum payment to the principal balance. That accelerates repayment terms significantly. The fact that to refinance with lower interest rates to replace the higher ones also cuts down the total interest cost is another advantage of tighter policy.
The different stages of freedom from obligations always depend on each person but after having a plan, financial footwork after college and prioritization when paying student debt is what creates this needed freedom.
