My 2 cents

Here are things to put into practice so student debt doesn’t delay important life decisions.

By Jordan Niefeld

According to the Federal Reserve Bank, outstanding student loan debt in the United States is estimated at more than $1.6 trillion — a figure that includes both federal and private student loans. It’s an issue we all regularly hear about on the national political stage, especially as we get closer to the 2020 U.S. elections.

For the first time in three years, interest rates on federal student loans decreased. For the 2019–20 academic year, lower rates apply to new federal student loans made on or after July 1, 2019, through June 30, 2020. Still, the student loan albatross is not going away for many.

Nationally, about 65% of college seniors who graduated in 2017 had student loan debt, owing an average of $28,650, according to the Insitute for College Access and Success. Arizona has the eighth-lowest average student loan debt among all 50 U.S. states and the District of Columbia with average student debt of $23,913. This is according to a recent study by Lend EDU, an online marketplace for comparing student loans. Lend EDU also found that graduates from ASU’s Tempe campus had the lowest average debt load in Arizona with $23,237.

There are approximately 15 million student loan borrowers age 40 and older, and this demographic accounts for almost 40% of all student loan debt. We know that for young adults, too much student debt can be a financial black cloud that can follow borrowers throughout their 20s and make it difficult to get on solid financial ground. Excessive debt can affect the jobs we take and may also delay typical adult milestones like buying a home, getting married, or having children.

Here are things to put into practice so student debt doesn’t delay important life decisions:

  • Don’t let interest build up. Student loans typically come with a six-month grace period when they don’t accrue interest. As soon as you can, begin paying back your student loans. This will help keep your overall interest payments lower.
  • Pay back more than the minimum due. Whatever the minimum, consider paying 50% more. Did you get a work bonus? Put it toward your student loans. This will help speed up the time it takes to pay off your loans in full.
  • Take a deep breath. The process of loan repayment seems like a daunting task but, rest assured, you can and will get it under control once you commit. Set a budget, be realistic, stay focused, set a plan, and follow through.
  • Think long term. Sacrifice today to prosper tomorrow. The more you can save and pay off your student loans today, the more you’ll have later on to enjoy.

The earlier we start to invest and save for retirement, the more likely we’ll reach our financial objectives in the long run.

By Jordan Niefeld (BS Marketing ’06) CPA, a certified financial planner for Raymond James & Associates in Miami. Previously, Niefeld earned a master’s degree in accounting and worked for the firm Gerstle, Rosen, & Goldenberg, PA, as a tax CPA, senior auditor, and forensic accountant for not-for-profits, LLCs, S-Corps, and individuals.

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