Like most recent college grads, Tamika Gambrell, now 26, left school with hefty student loansâ€”debt that now has to be paid, along with all the other bills that come with living on oneâ€™s own.
Gambrell, who lives in Glenolden, Pennsylvania, right outside of Philadelphia, earns good money working as a sales analyst for a large consumer products company. Still, even with her $60,000 a year salary, and annual bonuses that tack on another $5,000 in take-home pay, itâ€™s tough stretching her paycheck to meet all her financial obligations.
For starters, thereâ€™s the $840 a month that Gambrell and her partner pay to rent their apartment. Then thereâ€™s a $280 monthly car note. After graduating in 2003 with a degree in human development from Colby College, a small liberal arts school in Maine, Gambrell racked up $24,000 in credit card debt, so thatâ€™s another $300 a month out of the budget. Driving 60 miles to and from work each day means spending $300 on gas every month. When you throw in 401(k) contributions, healthcare premiums, taxes, food, utilities, and, of course, her $133 monthly student loan payment, itâ€™s easy to see why money can get tight.
Still, in many ways Gambrell considers herself fortunate. “After four years, I walked away owing only $28,000 in loans. Considering that tuition and room and board alone at Colby was $35,000 a year, I think I did alright,” she says.
Like millions of people in their 20s, 30s, 40s, and beyond, Gambrell took out student loans for a shot at a better quality of life and the chance to improve her career options. But with the price tag for a college education skyrocketing, the typical student graduates with nearly $20,000 in student loan debt. According to the College Board, the cost of attending a public, four-year college or university in the 2006â€“07 school yearâ€”including tuition, fees, and room and boardâ€”was $12,796, up 35% over the past five years; for private schools, the cost was a hefty $30,367.
Ensuring that you donâ€™t end up drowning in student loan debt requires solid money management skills, a working knowledge of how these loans work, the realization that interest rates are somewhat negotiable, and a familiarity with available government assistance programs. Read on and weâ€™ll help you navigate the world of student loan debt.
Bone Up on Your Loan Details
To retire those student loans quickly, first get a handle on the types of loans you have. Start by logging on to www.nslds.ed.gov, the Website for the National Student Loan Data System. Thereâ€™s a lot of information there, including all the federal loans a student owes, the dates various loans were received, how much interest and principal are outstanding, and the status of the loans (i.e., if theyâ€™re in deferment, default, repayment, etc.). Before loan details can be obtained from the NSLDS, you must first secure a four-digit PIN from the Department of Education, available at www.pin.ed.gov.
For those with private loans, call or write lenders directly, contact the school that provided the loan, or refer