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I'm 19 and transferred to a university. I left my community college with no debt. At my university due to my living situations I need to work full time. With that being said I have to have the vast majority of my classes online.

The university I attend charges almost $200 more per credit hour if the class is online. I just got my first bill and it's totalling around $7,000 (Without the FASFA), I already paid for my books and whatnot.

As for work I don't entirely make the best amount of money. I make $14.50 and as much as I'd like to say no overtime I do get it, but would rather not like to include a variable. So I guess I'm making 25 - 27K a year.

I want to get out of this debt as quickly as I can. How should I do this? Should I start payments right away, or wait for my actual career? Is there interest on this debt? I was informed there was no interest until 6 months of either being considered a drop out, or upon graduating.

  • what type of loans? Subsidized or non-subsidized? – mhoran_psprep Dec 24 '17 at 13:10
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    I qualify for the entire amount of what the FASFA offers. Including the Pell Grant and both loans. I would clearly take the one without interest, but in the event I need to take out the other loan, what should I do? – Porixify Dec 24 '17 at 13:11
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    I love the idea of graduating with as little debt as possible, but if it's causing a compromise in your grades or significantly delaying your graduation date, then you might re-balance your approach. I.e., you make $27k, if upon graduation it's reasonable to expect $60k, then taking on an extra $10k in debt to graduate a year earlier is reasonable. It's harder to factor in how much grades will impact your career. A few years after graduation people won't care about your grades as much, but for your first job they will. Ideally you can keep debt down, graduate quickly, and get great grades too. – Hart CO Dec 24 '17 at 15:32
  • @user66085: Can you answer mhoran_psprep's question about whether it's a subsidized or unsubsidized loan? If it's a subsidized loan, interest does not accrue (the government pays your interest) while you are in school and for a grace period afterwards. If it's an unsubsidized loan, you do not have to make payments while in school and for a grace period afterwards, but interest still accrues during this time. – user102008 Dec 24 '17 at 16:25
  • @user102008 It sounds from OP's response as if they qualified for grants, subsidized, and un-subsidized, and are intending to avoid the un-subsidized if possible. – Hart CO Dec 24 '17 at 17:29
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(Note that this is a primarily opinion-based answer.)

I want to get out of this debt as quickly as I can. How should I do this?

Regardless of whether or not you have SL debt, the way to get out of debt quickly is to:

  1. Know where all your money goes.
  2. Live within your means: pay off your CC bill every month!
  3. Live below your means: you need to build an Emergency Fund in case... well, you can figure out why.
  4. See if your employer offers a 401(k) and whether it "matches" any of your contributions. If they do "match", then contribute to the 401(k), since that's effectively a pay raise.
  5. After accumulating a $1000 e-fund, use the Avalanche Method for paying off any existing debts.

Regarding paying off your Student Loans ASAP...

  1. if they truly are not going to accumulate interest until 6 months after you graduate (read the loan agreement(s) and verify!!), then it's literally (and temporarily) free money. Take the money you'd otherwise use to pay the debt and stick it in a high-yield savings account (I like Ally Bank, but many others exist: Capital One 360, Synchrony, GS Bank, etc) until it does start accumulating interest.
  2. borrow as little as possible. (That sounds obvious, but people graduate with staggering amounts of SL debt because they were completely irresponsible with partying and living well above their means.) EDIT: this doen't mean you can't live off of SLs while in school; just live modestly at a state school...

Good luck!!!

  • @TTT did you party a lot, and live well above your means? Or did you borrow as little as possible consistent with the goal of graduating quickly? – RonJohn Dec 24 '17 at 21:00
  • hehe- i realize now I misunderstood what you meant. (I deleted the comment.) – TTT Dec 24 '17 at 21:06
  • @TTT but you raise a good point, so I'll clarify my answer. – RonJohn Dec 24 '17 at 21:08
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I want to get out of this debt as quickly as I can. How should I do this? Should I start payments right away, or wait for my actual career? Is there interest on this debt?

I used to work in Financial Aid, so my answer comes from a Financial Aid perspective.

You are eligible to start repaying your federal student loans as soon as they are disbursed. The great thing is that if you make payments on them within 120 days of disbursement, then you don't pay interest on the amount you pay back. So let's say that you have a federal student loan of $1000, with an interest rate of 4.5%. The interest start accruing from day one. However, if within 120 days you pay back $500, then the interest accrued on that $500 is reduced - meaning you don't pay that interest amount. You have to ensure that you apply the loan payment as a "refund" to your account. Contact your loan servicer for more information.

On federal student loans, you do not have to start your payments until 6 months after graduation or when you fall below half-time status - which ever comes first. Half-time status is defined by your school, so contact your Financial Aid or Registrar's office to find out.

In regards to whether or not you should start making payments right away, I would say "yes". Even a small $20 payment every week can make a big difference!

You should reach out to your financial aid office as they are there to help students manage their student loans.

  • Are there other forms of SLs that, as OP mentioned in his Q, "I was informed there was no interest until" don't accrue interest until after graduation/half-time? Or is OP mistaken? – RonJohn Dec 25 '17 at 15:00
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    Perhaps private loans. I’m not aware of any federal loans that are interest free until after graduation. – Michael Dec 25 '17 at 15:54

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