Advice for college grads: Managing student loans
by Michelle Singletary
BlackAmericaWeb.com--You’ve got the college degree, and now you’re stressed about what do to with the debt.
"Even if your student loans exceed your annual salary--which is, unfortunately, a common phenomenon these days--you can knock down those debts and start to regain control of your financial life," Lynnette Khalfani says in her new book, "Zero Debt for College Grads" (Kaplan, $14.95).
Those aren’t just words coming from someone who doesn’t understand your financial pain. Khalfani, a former "Wall Street Journal" reporter and CNBC correspondent, knows what’s it’s like to climb out of a debt hole. She paid off $100,000 in credit card debt in three years by negotiating lower interest rates, doubling and tripling her minimum payments, and using every windfall she received--tax refunds and year-end bonuses--to pay down her debt.
"I realize that the situation may seem bleak, if not downright impossible," Khalfani writes. "But trust me when I say that it is possible to dig yourself out from your debts."
Some of the best advice comes from people who have gone through something and managed to overcome their troubles.
The book’s release is timely. Lenders are now bombarding graduates with offers to consolidate their student loans. And for those considering consolidation, you might want to make that decision before July. The federal government recently announced that as of July 1, the interest rate for students and parents with variable-rate Stafford and PLUS loans will see their interest rates go up slightly.
Students with variable rate Stafford loans will see an increase of 0.08% to 7.22%. Parents will see an increase of 0.08% to 8.02%.
Graduates still in their grace period (the six months after graduation) can get a lower interest rate. But Khalfani cautions that people need to consider the pros and cons of consolidation.
Khalfani’s book starts by giving graduates and parents some general money management advice. After all, you won’t be able to pay off those student loans before a decade passes unless you have a handle on the basics--how to budget, save and cut expenses.
The bulk of the book focuses on the world of student loans, both private and federally backed borrowed money. Not surprisingly, many graduates don’t know the terms of their loans, much less who the lenders are.
Khalfani worked with AOL Coaches, a section on AOL’s Web site that provides videotaped tips from leading experts, to look at what people think about their student loans. In an AOL online survey of 400 respondents, 78% said they spent less than a day researching their financing options.
But "a lapse in judgment when it comes to educational loans can prove near-fatal to your financial life," she writes.
Khalfani lays out some strategies for getting rid of this debt, including explaining various options that allow borrowers to lower their monthly payments. She provides guidance and warnings for parents considering co-signing for a student loan.
Wondering if there are programs to help pay off your debt? There are, Khalfani writes. If you’re a U.S. government employee, the Federal Student Loan Repayment Program allows agencies to make payments on certain workers’ federally backed loans, up to $10,000 a year.
Khalfani said it took her 12 years to pay off her $40,000 in student loans because she made only the minimum payment.
"The lesson I learned was that even if you consolidate and have an easy, low, fixed monthly payment, don’t just forget about your student loans like I did," she says. "If you later start to make more money and can afford to pay more toward the school debt, I think you should do so."
In the AOL survey, among respondents over 35, 62 percent said they’re still paying off their student loans. Sixty percent said they couldn’t sleep at night because of this debt.
They can’t rest peacefully, because debt is a bad four-letter word, even for loans used to attend college. I know for some, student loans seem necessary. At least by turning to "Zero Debt" you get a blueprint on how to get rid of this albatross.
GPS Monitoring
For child sex offenders in Wisconsin, life will soon be very different. About 400 child sex offenders would begin lifetime tracking by satellite starting next year due to a recently announced deal by state lawmakers today.
Under the agreement, devices tracked by global positioning satellites would start being used on serious child sex offenders on January 1. Doyle signed a law requiring lifetime monitoring for child sex offenders last year, but in his budget he proposed changing the law so that the state would monitor offenders only during the time they were on state supervision. The changes announced would again provide lifetime monitoring.
Web site for health care workers
A new Web site from Northwood Health Systems is relieving the financial and scheduling strain of continuing education for Wisconsin health care workers. The company offers more than 1,000 accredited online courses for free.
Health care continuing education classes are designed to keep medical professionals up to date on current trends and to refresh their health care knowledge. The courses offered on the site provide continuing education credits to professionals, including registered nurses, licensed practical nurses, nurse practitioners, substance abuse counselors, case managers, crisis intervention specialists, outpatient therapists, supportive counselors and social workers.
For more information or to view the offerings, visit the site at: www.northwoodhealth.com.
State graded on eminent domain
Wisconsin gets a C grade in curbing government powers to seize and condemn private land for new development, advocates at The Institute for Justice recently reported.
The Arlington, Virginia-based group ranked states for policies on eminent domain, a land-taking process traditionally confined to public works needs such as new roads. The US Supreme Court ruled two years ago, however, that local governments can order the forcible sale of property for general economic development purposes as well.
