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Archive for September, 2016

Student loans - again.

September 24th, 2016 at 12:38 pm

It's been quite a few years since I paid off my student loans. We now find ourselves back in that situation thanks to our daughter's education.

I'm not complaining, though. We were quite fortunate to be able to cover all of the first 2 years of college from her 529 plan and even a chunk of year 3. When it came to paying the balance of about 19K, we had a few options. We could take a Parent PLUS loan. We could take a home equity loan/line. We could pull money from general non-retirement savings. Each had pros and cons. In the end, we opted for the PLUS loan for 15K. We covered the remainder from savings.

Thanks to my new part time job, I'm earning enough that my plan is to pay a minimum of $1,000/month toward that loan starting this month. That won't totally repay it in a year but it'll be most of it. We will need to borrow again for year 4 but hopefully not quite as much. It will all depend on my total income from the new job. In any case, even if we end up borrowing a total of 30K over the 2 years and pay that off in about 30 months, I think that would be pretty reasonable and I'm sure far better than what many families face so I'm thankful for that. If we owe $6,000 when she graduates, I certainly won't complain about that.

DD also took out a $7,500 Stafford loan. She is going to pay $450/month on that while it is in deferment. So that's $5,400/year. Assuming she borrows another $7,500 for senior year, by the time she graduates, she'll only have about $4,200 left to repay. Again, far better than what most college grads face today.

The moral of the story is to start saving for your kids' education as early as you can, even if it doesn't seem like a lot, every little bit helps. We were able to accumulate about 60K in her 529 but any amount is helpful.