How to Eliminate Those Pesky Student Loans

By Patrick Traverse

One of the things that I like about living in a warmer state is you can enjoy being outside most of the year. I love getting together with friends and sharing a meal with them outside on a patio. However, it’s never perfect! Something else wants to be included in the party—bugs. Flies can be very annoying. They will buzz around your head and land on your food. Unless you have been trained by Mister Miyagi, you probably won’t be able to swat them away.

In personal finance, student loans are the equivalent of annoying flies. According to new analysis from credit bureau Experian, more than 40 million Americans have student loan debt, compared to about 29 million in 2008. It has now become widespread practice for students to start their career with a large chunk of debt, and many of them will have this debt for most of their earning years. Some economists are even starting to warn about the effect of this trend on the overall economy.

Student Loan Tips

Here are some things you might want to think about:

  1. Only about 40% of borrowers who do include their student loans in their bankruptcy filing end up with some or all of their student debt discharged. 
Take this debt seriously! You should have a goal to pay off your student loans as soon as possible, because you might not be able to get rid of them if you need to file for bankruptcy. 

  2. Holding on to the debt will affect your purchasing power. 
Your purchasing power is affected by the amount of debt payments you must take care of every month. Failing to focus on paying your loans off might hurt you in the future when you need financing. 

  3. Have a plan to pay your student loans as soon as you graduate. 
The beauty of getting out of college for most students is to immediately feel richer. You go from struggling to make it with next-to-no income to, for some students, a pretty good starting wage if they studied in a needed discipline. The problem is that most of them immediately change their lifestyle to match this new reality. 
I recommend that you wait to splurge and focus on establishing proper financial habits. Why not find a roommate to live with for a while, keep living expenses low and get dedicated to paying off that loan and investing? Delaying gratification will help you build real wealth. 
(For related reading, see: How to Manage Lifestyle Inflation.)
  4. Be careful of student loan forgiveness programs. 
Not having to pay much of your loan back might sound like a terrific idea, but before you opt for a public-serving career path, make sure you understand what you will lose. Do a calculation to determine the income and the career enjoyment you would give up by choosing this route. Joining a corporation or a private company might be worth it over the long-term even if you need to pay off your debt on your own. 

  5. Help your student have a smart higher education plan. 
If you are a parent of a high school student, make sure your child understands how their college choice will affect their future. The good news is more colleges accept credit transfers from other institutions. Credits earned in high school or community college can be used toward the completion of their degree. This could help you and your student save a boat-load of money. 

  6. Make your goal to avoid being annoyed by student loans! Making proper financial decisions doesn’t need to wait until someone earns a good income. Guiding your child toward making the right choice for what they want to accomplish in life should give them a quick start in reaching their financial goals. If you already graduated and are facing a large debt to pay, don’t wait to create a real plan to get rid of it. Make it swift and focused, Karate Kid style!

(For related reading, see: All About Student Loans.)

IMPORTANT DISCLOSURES: MoneyCoach LLC and/or Patrick Traverse offer Investment advisory and financial planning services through Belpointe Asset Management, LLC, 125 Greenwich Avenue, Greenwich, CT 06830 (“Belpointe), an investment adviser registered with the Securities and Exchange Commission (“SEC”). Registration with the SEC should not be construed to imply that the SEC has approved or endorsed qualifications or the services Belpointe Asset Management offers, or that or its personnel possess a particular level of skill, expertise or training. Insurance products are offered through Belpointe Insurance, LLC and Belpointe Specialty Insurance, LLC. MoneyCoach LLC is not affiliated with Belpointe Asset Management, LLC. Additional information about Belpointe Asset Management is available on the SEC’s website at

This article was originally published on Investopedia.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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