Scoop on Savings: What would you give up to pay your student loans?
EL PASO, Texas (KFOX14) — The thought of staying off Netflix for life might seem extreme, but college grads say they’d do it if it meant they didn’t have to pay back their student loans.
In this week’s Scoop on Savings, financial professional Brian Mirau, from Mirau Capital Management, gave me some surprising answers from a new survey, and some better ways to tackle student loan debt.
“There’s typically four things a graduate can do,” Mirau said. “The first thing they wanna do is, choose a repayment plan. Now the government will assign you the standard repayment plan, but there are 8 different options you can choose from. Now, there are some options that are income-based options, which are good for young graduates that have low income.”
Mirau says the next step is to not miss any payments. You have 270 days to make your payment – otherwise you will go into default.
“You can also set up your payments for auto pay to keep you from missing your payments,” Mirau said.
The third step, is to attack your debt.
“If you’re a student and you have $35,000 in student debt, with an interest rate of 6.8%, and you compare a 30-year note, to a 10-year note, well if you choose the 30 year note, it will reduce your payment by $170 per month,” Mirau said. “But, when you choose that over the 10 year note, it will increase your overall payment to your plan by $34,000 a year. Now that’s worth skipping a trip to Chipotle or Starbucks for.”
And last, Mirau says to think long-term. Saving early, even if it’s just small amounts, is important because you can use the magic of compound interest over time.
Consumer Financial Protection Bureau -- Understanding student loans
