I have discovered, to my dismay that I owe more money to my student loans today than when I graduated from college.
How did this happen?
(1) I have been paying off my student loans using the graduated payment option and
(2) I have been deferring my student loans because I am still taking classes on a part-time basis.
(1) I consolidated my loans about 18 months ago. Since then, I have over 1,000.00 more dollars to pay off. This occurred because while I only had to pay a little over $250.00 per month, the interest on my student loans was almost $400.00 a month.
I picked the graduated payment option because the standard payment would have been over $500.00 a month. I could not afford this. I’m only teaching part-time while working two other jobs. While I couldn’t afford the $500.00 plus payments each month, I can afford the $400.00.
My educational services company does allow me to pay over the minimum so I am able to pay all of the interest and some of the principal on my student loans now.
(2) The problem with being in deferment on student loans is that not all student loans are subsidized by the government.
What I found out was only half of my student loans that I consolidated are subsidized.
That means that when I am back in school, the interest on my student loans is costing me about $200.00 a month. I am taking a class right now and am in deferment.
I noticed that the amount of my student loans is slowly rising. However, I can still pay on my student loans and decrease the amount I owe instead of watching it increase.
Now that I am aware of how the interest can add up when legally not paying my student loan, I plan to pay it on a regular basis even if I don’t have to.
I know now that even when I was in school getting my master’s degree, I could have been paying the interest on my unsubsidized student loan in order to keep the total amount I owed lowered.
A way to benefit from payments on student loans is the amount of taxes owed each year.
The student loan interest that was paid over the year may be deducted from taxes owed. Please check with the Internal Revenue Service to make sure you qualify.
I am happy to have a master’s degree but I don’t want to spend the rest of my life just paying the interest.
Another danger to the graduated payment is that the amount due on the graduated payment does go up over time even if my income doesn’t.
I would not like to be in default. I would much rather pay off the interest and loan as much as I can now.
The minimum payment for the graduated payment option and the ability to defer my student loans when taking classes costs me too much when I think of my future.