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Monday, February 13, 2012

Old vs New

This is a conundrum faced by today's young adults that our parents and their parents did not face.  Today the average college grad starts their professional life with just over $25k in student loan debt.  My parents both graduated from private universities, my father from Syracuse and my mother from Villanova.  They graduated with a cumulative debt load of $4500. Today's youth are not only facing the extreme escalation of education costs and the ridiculous interest rates associated with them, but they are also faced with credit card debts, living expenses and other liabilities that their parents may not have experienced.  

My wife and I both worked while we were in college and were able to make some headway on paying off our loans before leaving school, or not accumulating a loan in the first place.  Our Student loans currently look like this:
    Loans include both undergraduate bachelors degrees and my wife's masters degree.
Me:
Original Principle       Interest Rate        Currently Owe
$5,147.84             @        6.250%               $0.00
$8,430.23             @        2.875%               $4,746.14
$3,386.56             @        2.875%               $1,630.39
Her:
$9,431.89             @        6.250%               $4,016.42
$5,288.00             @        6.800%               $3,449.02
$7,475.00             @        6.800%               $5,394.51
$4,533.64             @        6.800%               $3,881.75 (masters loan)
$6,153.94             @        6.800%               $5,203.58 (masters loan)
Totals:
$49,847.10                                                  $28,321.81
We currently pay $625.00 monthly towards these loans biased to the highest interest rates.

Meanwhile my wife grew up in an economically disadvantaged family and she amounted many revolving debts that were unpaid and in collection.  Those debts were around $4k and since my student loans were the only debts I had, I used my very good credit to absorb her outstanding debts to clear her collections and allow her to build a new credit history.  Most of our parents did not face the extra burdens that the credit industry has been able to create for the youth of this country.  Don't get me wrong, I am a firm believer in the power of responsible credit use.  I have been a credit card holder since I was sixteen and I have made a substantial amount of money on cash back offered by the credit companies.
I merely want to point out that EASY credit, managed irresponsibly, can debilitate long term goals very rapidly. 

I am currently satisfied with the repayment status of these loans.  For 2012 I will not be changing the payout for them.  I would consider an opportunity to consolidate the loans in the 6% range but so far I have not found that opportunity.  Ideas are welcome?

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