by JustbeFRANK on June 22, 2009

You should know that student debt doesn’t work like other loans. You will need to repay this debt throughout your life. In fact, most students will need to start repaying their loans before they even finish earning a college degree.

This guide will explain what you should do to start repaying your student loans. However, keep in mind that can you also visit the SoFi website if you have further questions.

When to Start Repaying Your Student Loans

The student loan interest rate for Federal Stafford loans is currently at 3.4% and for subsidized loans it is 1.75%. If you have a Stafford loan and you pay it off every month, your loan will be fully paid off by 2033. If you start repaying at a rate of 1.75%, that will mean you will be paying about $1,300 every month by the time you graduate, which is not a great deal. If you are thinking about paying off your student loan in a lump sum and doing so now, think again. Your loan will have to be paid off over a longer period of time (typically 20-25 years).

Student loans have high interest rates (from the government’s point of view), meaning your interest rate will increase substantially when you have to repay the loan. For example, suppose you borrowed $30,000 in 2010 and paid it off at 6.8% by the end of 2014. Your interest rate will be about 10% in 2016, and 25% in 2029. Of course, you could still pay the interest rate by making regular payments and paying off the loan more slowly.

So, once you are out of the workforce, there are no immediate benefits of a career change. If you can afford the loan, you will owe it when you have to pay it back. Some students might be able to live with their debt for years, especially if they make their payments before the loan is due. That will increase the interest that you will have to pay. But you will never have any of your personal financial information public for free or in any other way available to the public (like your tax returns), and there will never be a way for anyone to know what your debts are in real terms if you are unemployed. This is a major reason why so many of us get jobless so quickly.

The real problem with the “recovery” meme is that it is an entirely false economy. According to mainstream economic theory, there is no “recovery” if the Fed has been using “Quantitative Easing” to create money out of thin air. So, by definition, there is no real recovery, no new jobs, no real wealth creation in the economy. And that is why, although Obama has gotten credit for job creation in recent months, unemployment remains stubbornly high and real economic productivity is stagnant.

There is one important question remaining: What will happen to the hundreds of millions of Americans whose wages have dropped to an economy-sucking $7.25 per hour? That will be the real job-creation crisis of this economic recovery.

Obama may be feeling “tremendous pressure” to move on from his disastrous economic policies. But Obama will not be able to leave the American people in any better shape than he found them.

Ronald Reagan was a genuine conservative. He was not a “New Dealer” or “Reaganite.” He had a clear, conservative, economic policy vision that the Democrats would never adopt or carry out. Reagan did not believe in government bailouts or “welfare queens.”

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Mr WordPress June 22, 2009 at 4:58 pm

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