Student loans and reducing debt stress

wcc-dollars&sense_paulbriggs_wallpaperCollege is an excellent investment. According to a recent study, a four-year degree produces benefits far in excess of the cost of going to college. After some years, the average college graduate earns $800,000 more than the average high school graduate by retirement age.

While college is worthwhile, it does cost money. There are numerous options out there to pay for college: scholarships, Pell Grants, working, help from parents, etc. Please see Steven Chigawa at the WCC Financial Aid office. I was amazed at the number of grants and scholarships available for students.

However, there is always the option of getting a student loan. Loans come at a price of course, and that price is interest. Student loans are a bit different than regular loans in that students are not required to pay off those loans until they graduate or leave school.

You can take out loans that are sponsored from the federal government or directly from private lending institutions. The cheapest (in terms of interest) loan option is a Stafford Student Loan. This is a loan directly sponsored by the federal government.

The interest rate is low and fixed over the life of the loan and payments do not start until 180 days after you leave or graduate from school. The payment terms are much more flexible than from private institutions.

However, you must file the FAFSA form with the federal government, can only borrow a limited amount of money (based on whether you are a dependent or not) and can only use the money to pay for tuition, books and housing.

According to Steven Chigawa, is the go-to resource for all forms of federal financial aid.

You can, of course, take out loans through private lending agencies. With these loans, the processing time is quicker, the funds can be used more flexibly than Stafford Loans and there is no federal filing.

However, a credit check is required for these loans, and the interest rates may be higher than federal student loans. Finally, the payment terms are far stricter than for federally subsidized student loans.

Chigawa says that the vast majority of loans he processes for students are federal loans. However, even for these federal loans, WCC students have a 20 percent default rate. Defaulting on these loans can have a very bad impact on your future borrowing ability.



How do you pay back that loan once youʻve graduated? To reduce debt stress, here are some strategies for repaying the money as quickly as possible:

• Be prepared to sacrifice. Have a timeline of how much you will pay, then stick to that timeline, even if that means cutting back on current spending.

• Make more than minimum payments. The lending agencies want you to make just the minimum payment; that is how they make their money. By paying more than the minimum, you pay less in interest.

• Reward yourself. Set your payment schedule in manageable stages, so you can reward yourself after completing each stage.