Student Loan Solutions

I wouldn?t trade my education for the world – but I will say that we?re not living a ?free? society if we don?t give every single mind the opportunity to be shaped without the fear and stress of debt. It?s bad enough we have credit card … Student Loan Solutions Are you asking about your own student loan debt or loan debt in general? Are you trying to pay it off? Are you wondering if you should pay off your student loan vs credit card debt? I have a fair amount of experience with student loan

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available at any time – visit AlternativeStudentLoan.com + Stafford federal student loans at StaffordLoan.com + Student loan consolidation at StudentLoanConsolidator.com + FAFSA form tutorials and free help at … Student Loan Solutions I was one such student – fortunate enough to have been given student loans, and unfortunate enough to be saddled with them. I asked my experienced contacts at Linkedin to give some advice to anyone struggling with

deep in the hole financially. While the mood on the day of graduation is a gleeful one, the issue of debt is very real, one that could be haunting some for a very long time. Uber-blogger Chris Pirillo highlighted this issue in a two-parter today on Student Loan Solutions and Student Loan Debt, concluding that he doesn’t know if student loans are “more of a hindrance than a help.” The major issue, he writes, is that forward-looking young adults are expected to get an education, whether we can afford it or not, meaning

I graduated from the University of Connecticut in 1974. There was no tuition, and the student fees amounted to less than $100 per semester. UConn’s budget was heavily subsidized by the state of Conn. The rationale was that UConn was a land-grant college and any high school graduate in the state should be able to afford to go there. The total tuition and fees this year comes to $8,362! We can’t afford to send our kids there or to the other state colleges, which are cheaper – “only” $7,091 per semester. Thank God for the community colleges, where they can complete the equivalent of the 1sts of college and transfer their credits to UConn or the state colleges. Even factoring in inflation, the 1970’s fees don’t even come close to current costs.

And don’t talk to me about the cost of textbooks!

I dropped out of school and returned when I was advanced in my career enough to pay for school out of pocket. I’m also childfree and take public transit instead of owning a car. After food and rent, school is my #3 budget priority. No loans, no interest.

A very wise person once told me, there are two types of debt. Good debt and bad debt. The trick is to determine which ones are which.

He also shared that good debt was debt which others are paying. For instance, if one owned real estate and his/her tenants were paying down the mortgage and expenses this would be a great example of good debt.

Bad debt is what one is paying with student loans, credit card bills mortgage payments, etc. However, regarding student loans; I think its fair that many of us agree that education (in many forms) is very important for many reasons and can yield higher paid jobs, networking opportunities with other like minded individuals and skills that can be applied for life. So assuming we all agree that education is a great investment with an absolute return on investment (when properly applied) its still considered by many experts as bad debt.

Now, Just because a recently graduated borrower has extended his terms to lower his payments through student loan consolidation does not necessarily mean that he’ll be paying more interest over the long term. In fact, when a client does consolidate he/she often lowers the interest rate and fixes the rate for the life of the loan. (The loan payment terms do depend on the size of the loan, which is the main catalyst for such dramatic monthly payment reductions.) But my point is if the borrower takes the loan to full term, then yes, as Jennifer suggested he/she would unequivocally be paying more in interest than if he/she paid down the loan. Federal loan consolidation programs do NOT have any prepayment penalties like some mortgages do, so the borrower really has full control with student loan consolidation and may pay off the loan early at any time.

So, once the client has consolidated and started enjoying some debt relief we usually suggest to our clients to take the difference in payments and invest the difference. We usually like to refer our clients to real estate in stable markets because real estate is one of the easiest barriers of entry to get into and often provides high yields of return with a cash on cash return.

Finally, I think its important to realize the intent of student loan consolidation and then determine if the program fits in your plan. The program was originally designed in the 60s to provide immediate debt relief by fixing the interest rate and extending the loan terms, providing lower monthly payments for the borrower. The idea was (and still is) that the newly graduated borrower may require some time before they start earning enough money to become financial stable. Once the borrower has secured a stable job, he/she can start doubling payments (all federal loans are simple interest, meaning that doubling up on payments means the principle of the loan is paid off even faster)

Bottom line. Yes, student loan debt is an example of bad debt. But, student loan consolidation can be a great opportunity to leverage into high yielding investments that can set you free. There are also some added benefits to student loan that are much superior to other forms of bad debt. For instance, low interest rates and legal tax deductions.

Many of our wealthy clients (doctors, attorneys, etc) consolidate their student loans, reduce their payments and take the difference in payments to reinvest into high yielding investments in that order. They then legally write off the interest of the student loan and a portion that was used for tuition as legal tax deductions from their income tax. Ask your CPA for details or search for HOPE credit for more information.

Stay tuned for a full report on How to legally write off a portion of your student loans and put more money in your pocket. I’ll be happy to post the link here with Chris’ and all of your approval.

[...] 1. Jason Calacanis — Posts on LinkedIn Answers; here and here 2. Chris Pirillo — Posts on LinkedIn Answers from the past; here, here and here [...]

I am looking for help with my daughter’s law school loans. Her starting salary is not enough to begin repaying them. Where can she go to get advise on how to deal with this situation?