Embracing Student Debt: A Responsible Choice
As a proud holder of a six-figure student debt, I’m often met with raised eyebrows and concerned whispers. But I’m here to tell you that my decision to take on this debt was a deliberate and responsible one. In fact, I’m in no hurry to pay it off, and I believe that’s a perfectly rational choice.
The Benefits of Federal Student Loans
When I talk about student debt, I’m specifically referring to federal student aid programs. These loans come with favorable terms that set them apart from other types of debt. For instance, they can be deferred or forgiven, and repayment is based on income and family size. Plus, they don’t hurt your credit score if you choose to defer or forbear. In fact, paying them off on time can even boost your credit score. My own credit score of 758 is a testament to this.
Debt as a Mindset
While my student debt hasn’t significantly impacted my finances, it has affected my feelings about financial stability. However, by researching, planning, and building confidence, I’ve overcome those emotions. A conversation with economist Jeffrey Hansen changed my perspective on student loans. He encouraged me to view them as part of my larger financial picture, rather than a debt to be eliminated ASAP.
Prioritizing Investments
I’ve made a conscious decision to stick to the lowest possible repayment amounts. This allows me to focus on more important investments, such as building a strong retirement fund, emergency fund, and saving for a down payment on a house. With my public interest career goals, I’m eligible for Public Service Loan Forgiveness (PSLF), so I’m better off paying the minimum and seeing how my career pans out.
Revisiting Repayment Strategies
When my circumstances changed, I reassessed my repayment plan. After a raise and bonus, I consulted with Mr. Hansen, who advised me to stick with the lowest required monthly payment. This allows me to maintain financial flexibility and target my most expensive loans through prepayment if needed.
Rethinking Student Debt
I’m not advocating for my approach, but I want to challenge the knee-jerk reaction to student loan debt as a personal failing. My experience has taught me that debt is a part of life, but it doesn’t define my financial picture. By making deliberate choices about repayment, I’m able to achieve my larger financial goals.
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