Graduating college with debt – a popular and widely discussed topic, today. Unfortunately, graduating college with debt is very common and affects most of us. When I graduated from college (CSU Fullerton), after spending three years at community college, I managed to keep the amount I owed down to $25,000 USD. I worked part-time, usually holding multiple jobs at once, for the first 4.5 years and then switched to a part-time student and full-time worker during the last year. I also managed to save the hardest class in my focus to last – infamous Math 350 (Advanced Calculus). This class was 100% proof-based. Rather than use the proven mathematical laws, we were asked to prove them – difficult.
I remember calling the Federal Loan Office the week after I switched to a part-time student and full-time worker. I was greeted by an amazing lady. She informed me that my 6-month grace period was used when I left University of California, Berkeley – another story that can be read here. So, I had to start paying the loans bask ASAP. She asked me how much I would like to pay per month. I told her that I would like to pay a flat rate for the 10-year loan period as opposed to a flexible amount that increases over time. She gave me a number ($265 USD) per month and asked again if this amount was doable. Before I could say yes, she said if not, it is totally fine. And, if for some reason, you are unable to pay the amount in the future and/or miss a payment, do not worry at all, you can miss a few payments without penalty.
During the entire process, I was thinking to myself, “how many times has a company asked me how much I wanted to pay them per month?” I was also thinking, “how many companies tell me that it is ‘okay’ to miss a few payments?” The answer to both questions, no companies.
If I continue to pay the $265 USD per month for the life of the loans – 10 years – I will most certainly be paying more in interest than if I paid the entire loans off today. Refinancing can also save me a few bucks. Why have I not refinanced or paid the entire loans off? Well, I like the flexibility that the Federal Loan Office offers and the fact that if I get into financial trouble in the future, I can call and readjust my payments. I think of it as purchasing flexibility. To me, it is worth the extra interest that I am paying.