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i could pay off my student loans, but...

school debtGComment

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.