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Oahu, Hawaii Oct. 2014
Stick your toes in first before saying yes to school loans. Did you know that when you get a school loan you can’t get ride of it unless you pay it off? It cannot be included in a bankruptcy and not paying or deferring the payments keeps the interest running and ramps up the principle until you pay it off.
School loan interest is considered to be the 2nd largest income for the government, which is why they are so highly advertised and most of us are conditioned to think we need to run back to school when we’ve been laid off.
Let me give you an example of what I mean by ‘ramps up the principle’ and why these loans are so easy to get but deadly to your pocketbook. My girlfriend called me the other day saying that her school loan had doubled…
and couldn’t figure out why. When she told me what interest she was paying it was easy to figure out why. Together we divided her interest rate into 72 to determine how long it would take for her loan to double. My friend’s loan will double every 3.6 years (72 divided by 18 = 3.6 years to double). For 3.6 years she has deferred the payments and, unfortunately for her, she has now been laid off and can’t make the payments.
Her original loan was $20,000. 3.6 years later it’s $40,000 and in 3.6 more years it will be $80,000 and so on. If you need money for school try to find another way to finance your schooling. Here are a few ideas;
- Work and pay by the quarter.
- Start out in junior college for the first 2 years. It’s much less expensive.
- Work as an apprentice, on the job, for free. Get real world training & not just book learning.
- Apply for grants by calling the Heartland Institute of Financial Education, who can help students until they are 2 years away from graduation. There are free library events that share this information.
- Borrow from someone… anyone other than a government institution.
- Make a deal with your parents.
If you decide you just have to have a school loan be prepared to pay it off as soon as possible or it will seriously hinder the ability to Maximize Your Wealth. Always remember that just because you went to school it doesn’t mean you’ll get a job. Stick your toe in the water first and find out just how much you’ll make and if the job you desire is available before you take a dive into a lifetime of debt.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]