Broker Check


| February 10, 2020

As I was leaving the grocery store a few months ago, a headline from USA Today jumped off the page: College Student Loans: Debt Hits a New High. Last year, college seniors graduated with a diploma, a well-paying job (hopefully), and an average student loan debt of $29,200, according to a new study by the [[ Institute for College Access and Success]].  Almost two in three college seniors, or about 65% who graduated from public and private nonprofit colleges in 2018, carried college debt into their post-graduate world. Connecticut held the dubious honor of the largest debt load—$38,669, while Utah had the lowest burden $19,728. If there is any good news, debt levels were up just 2% from 2017.

I don’t believe anyone is surprised by the high debt burden. Soaring college costs have been well documented. In 1985, the annual tuition, fees, and room and board rates charged to full-time undergraduate students at a four-year public university ran $3,859. By 2015, the cost had ballooned to $19,189, according to the National Center for Education Statistics. For private schools over the same period: $9,228 to $39,529.

The increase in costs is sobering. No wonder so many kids today graduate with both a degree and a heavy debt burden. It’s a far cry from when I attended school. These are averages and costs will vary, but they paint an unsettling picture.

While we believe a college education is a worthy investment, $30,000 in debt is a heavy burden for someone that is 22 or 23 years old. Unfortunately, many underestimate the time it will take to pay back their loans. According to a survey, respondents believe they are six years away from being debt free. If only.

This month, I’ll offer several ideas that can help bring your student debt loans, or any debt burden, under control. Before we get started, let me say that there is no magic formula. Debt is debt, it accrues interest, and lenders expect to be repaid. But if you set a goal, map out a plan, and stick to the blueprint, you’ll be surprised at the ground you can cover. That said, typical rates run from 4.5% to 7%, with a term of about 10 years. That’s a monthly payment of $324 and $9,702 in interest on the average debt of $29,200, assuming 6% interest.

1) Apply for student loan forgiveness. You can try, but odds are very low you’ll have any success.

2) Make more than the minimum payment. By adding just $100 per month to your payment, you’ll pay the average debt off three years early and shave a cool $3,000 off your interest payments (data taken from loan calculator).

3) Pay off high-rate loans first—the avalanche method. If you have more than one loan, make the minimum payment on lower-rate loans but apply that extra payment to the highest rate loan first. There’s no reason to pay more in interest than necessary.

4) Pay off the smallest loan first—the snowball method. This loan may not be your most expensive loan, but you may feel a sense of accomplishment from ‘checking the box,’ or ‘wiping out’ one loan. It’s visible, tangible progress when a loan fades into oblivion.

5) Rollover over the payment. Once you have eliminated the first loan, take that entire payment and roll it into the loan with the next highest rate (or the loan with the lowest balance). Do you see what you are doing? It’s called MOMENTUM. When that loan is paid off, you have additional cash to plow pack into the third loan.

6) Can you refinance to lower rates? A lower interest rate may translate into fewer payments. But be careful about extending the length of the loan. Lower payments may tempt but the goal is to obliterate your student loans, not pile up additional interest and delay the day when you’ll be student-debt free.

7) The auto-payment option. Just do it. Does your loan servicer offer auto-payment? Most do. You may save 0.25%, and auto-payment is a ‘set and forget’ way of paying back debt. Besides, you won’t have to worry about missing a payment, late fees, and a black mark on your credit report.

8) Be careful with extended payment plans. Such plans reduce your monthly payment and may be income-based, but it will take you longer to pay off your student debt and you’ll pay more in interest.


Your goal is to put your college debt in the rear-view mirror. Be strategic about your choices. Set up a plan. Use our pointers as a guide. As always, we’re here to answer your questions.


Registered associates of Continuum Consulting Group are registered representatives of Lincoln Financial Advisors Corp., a broker-dealer (Member SIPC) and registered investment advisor. Continuum Consulting Group is not an affiliate of Lincoln Financial Advisors Corp. CRN-2800031-102819