Student Loan? Credit Cards? which first

iVillage Member
Registered: 11-02-2009
Student Loan? Credit Cards? which first
9
Mon, 11-02-2009 - 10:47pm

I just finished graduate school. Combined both undergrad and graduate degrees came to a whopping 94,000.00. I have a credit card debt of 4800.00. Luckily i was able to get a job right out of graduate school.

Today was the day that most of my loans came out of forbearance/deferment.

The following are rough estimates of some of these obnoxious loans i decided to involve myself with.

1. Federal loan Staff - 40,000.00
2. Private student loan - 40,000.00
3. grad loan - 10,000.00
4. grad loan - 3.899.00

Aside from this train wreck i have a credit card debt of 4000.00

I wanted to know if this was a good idea.

I decided to put three of the four loans in forbearance and focus on paying off this credit and small loan.

I make enough to ::tear:: put 1k of my paycheck into my whopping debt.

Is this a good idea or not? let me know.

I need support, this is like the first time I'm actually writing about debt.

thoughts? concerns?

iVillage Member
Registered: 04-10-2003
Tue, 11-03-2009 - 7:58am

Hi there!


I would check to see what the interest rates are on all the loans. In Canada interest on a government student loan is tax deductible, and therefore is generally the last debt to be paid off. If its the same in the US then leave them till the end. CC's are generally high interest and should be the first.


I would probably focus on the CC first (its likely the highest interest and you could have it taken care of rather quickly). Then I would tackle the student loans in order of highest interest rate.


Good luck!


Bex -


"Yesterday is history, tomorrow is a mystery, today is a gift -thats why its called the present."


Bex -

iVillage Member
Registered: 03-27-2005
Tue, 11-03-2009 - 8:39am

I would pay off the credit card first. Then focus on the lowest grad loan, then the next grad loan. Then the private loan and keep the undergrad government loan for last.

stacy

iVillage Member
Registered: 11-14-2008
Tue, 11-03-2009 - 12:44pm

I would take care of the CCs first. Stay focused and you can do this. Good luck.


iVillage Member
Registered: 03-30-2005
Wed, 11-04-2009 - 12:29pm

If you havent consolidated your stafford loans, do that now. If any of your grad loans qualify to be included into the consolidation, add them too. A consolidation loan will spread your payments out to 20 years, and give you a lower interest rate. Not that you want to take 20 years, but it will give you breathing room by lowering the minimum payment.

I agree with pp - pay off your credit cards first, then the private loans, then the federal. Do you qualify for a forbearance? If you have $1000/month for debt repayment you might not be able to put them into forbearance anyway. I would avoid forbearance, b/c for me, it would be too easy to spend that extra money rather than put it toward debt like I should. And honestly, that's essentially what DH and I did - paid the minimums on all our loans, and never made it a priority to get out of debt. If you can pay min on everything, and still have $100-$200 extra to throw on to the priority loan (CC, private, then fed) I think that would be better than putting loans into forbearance.

Photobucket

iVillage Member
Registered: 08-24-2007
Wed, 11-04-2009 - 12:48pm

I guess we're all in agreement -- the credit cards should likely go first.


I feel your pain, 2nd-hand.

Kate


empty purse

iVillage Member
Registered: 01-27-2009
Wed, 11-04-2009 - 8:35pm

Jeez Kate, no pressure or anything! ;)

Well, I am in a similar boat, where I have tens of thousands in student loan debt but only a couple hundred in credit card debt. I could technically pay off my credit card tomorrow, but only pay 10% a month until I get a contract that guarantees me a couple of months work.

However, despite the lack of Canada flag beside my name, I am Canadian. I have no clue about American loans. If it were Canadian loans, I would agree with PP about making your CC a priority (and possibly private loans). Personally, I would consider a private loan more urgent than a government loan because (a) Canadian loans at least can be claimed on taxes, and (b) a private loan will get b**chier if you can't make it than a government, who will listen and work it if you call to say you can't make it (again, Canadian. Don't know what Uncle Sam is like).

There is an important question you didn't answer: on top of interest rates/numbers, did your student loans come due/require payments during your grad education or did they wait until you're done? Very important. If you had to start paying some of them while still in school, I'm betting they can't wait.

Lastly, I agree with paying the smaller one if you feel you need to: debt is emotional and if getting to cross one off your list will give you that emotional boost to keep going, it is worth the investment in it first.

But I didn't ramble enough. Yeah, loans suck. I think you'll be ahead of the game with your Masters than I am with a Bachelors (the only people who think a bachelors is good are those who couldn't go but should have had the opportunity). But while you're working it off, you just want to yell at the TV screens and internet articles who say student loans are "good debt." They sure don't feel like it! (even if intellectually I agree)

I sometimes actually feel panicky over them. My current "trauma" is that I applied to have some relief, the time is ticking on my due date and I don't know if I was approved. I think this will be a regular thing for me because I don't make that much, I have to save for times between contracts and then on paper it can look like a made a fair bit but where on the application is there a spot to write "sure, I had a job but my contract ends in 2 weeks so I don't know what I'll do for the next month or if I'll be able time find a new one!"

My primary consolation is that everyone I met in school, except a certain friend whose job with the government is so important/secretive that she can't tell us what she does, freaks out about their loans from time to time. And "'Til Debt Do Us Part" episodes where their debt is student loan. It may not be the best tradition (beers at Homecoming is better), but it is a time-honoured one ;)

iVillage Member
Registered: 08-24-2007
Thu, 11-05-2009 - 7:33am

LOL - no pressure, just thought it would be nice if you posted!

Kate


empty purse

iVillage Member
Registered: 01-27-2009
Thu, 11-05-2009 - 8:12am

Actually, now that you point it out, it is a scary thought. Worse, I think some men use that as justification ;)

I've heard many theories on why education is so expensive, including the lovable without-royalty-professionals-became-the-new-elite-and-expensive-education-keeps-the-riffraff-out. However, getting an education and my choice in university are some of the few decisions in life I never regret. Maybe it's because I only just started paying back the loans so the gravity hasn't full hit me. Nah, who regrets an education?

PS: my cat is another decision I've never regretted.

iVillage Member
Registered: 09-15-2004
Fri, 11-06-2009 - 1:38pm

Yes student loans and credit cards..the bane of people's existance.


I have about 30,000 in student loans after it will all be said and done. (Graduate School). They are all Federal Unsubsidized loans.


I also have a HELOC that we used