Saturday, June 13, 2009

A plan to pay off student loans whilst still in college: (Personal Entry)

My plan


I don't know how long I'll stay in college, but I'd better keep enjoying it because it's the only way to keep student loans from drowning me. The worst loans I have are the Alternative Loans. I plan to pay off all my Alternative Loans with the Unsubsidized, Subsidized, Perkins loan, and grant refunds.

Then once the Alternative private loans are paid off, I will pay off my Unsubsidized loans with my Subsidized, Perkins loan, and Grant refunds. Then after the Unsubsidized loans are done, the Subsidized loans come next. Once I only have Perkins loans, they will be far more manageable than the other loans, and I can join the Peace Corps because serving there pays off 15% of those loans every year.

Sure, when you say "Life is Short," life may be short now, but our expectancy keeps rising every year. If age 40 is the new 30 nowadays, 40 will be the new 20 by the time I'm 40.

Advice for you, if you are in a similar bind


If your job is barely letting you get by or is otherwise just not sufficient enough to help pay off student loans, here is how you can accelerate the process.

There are worser loans and better loans. Let's start off with the worst:

  1. Pay off your credit cards with your private, alternative loan refunds.

  2. Pay off your private, alternative loans with your unsubsidized loan refunds.

  3. Pay off your unsubsidized loans with your subsidized loan refunds.

  4. Pay off your subsidized loans with your Perkins loan refunds.

  5. Pay off your Perkins loans with grant refunds (and possibly by serving in the Peace Corps.)

  6. Enjoy your grants!

You'll have to pay off your private loans over a period of 10 (or opt for 15) years at a fixed amount no matter what. For federally-backed loans however, you can negotiate a payment plan that works for you. (Example: 10% of your income, no matter how low it is, starting from a minimum of $40/month.)

What would be better is to not take out private, alternative loans in the first place. They are the worst kind of student loans; a lesson I've since learned.

Endnote


One of the reasons I took out alternative loans was because I operated under the assumption that there was no tomorrow. That is, no tomorrow beyond December 21, 2012. (That is the famed date when the Mayan Calendar ends, and more according to this article about the 2012 doomsday prediction.) I had hoped there would be an apocalypse starting that day that would obliterate Sallie Mae and wipe my slate clean with them while I hid in a fallout shelter somewhere.

But I had a moment of enlightenment and started operating under the assumption that the Apocalypse may not happen on that date; that Jesus Christ may not come back then, and that life will go on as usual. That's why I made this payoff plan to pay off higher-interest loans with lower-interest loans and grants.

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